Baghdad, Iraq – The increasing use of digital payment systems is helping to lower borrowing costs for citizens. According to Midhat Mohammad Saleh, an advisor to the Prime Minister, these systems play a vital role in boosting economic stability by integrating cash savings into the formal banking sector.
Saleh emphasized that a significant portion of the country’s wealth is stored outside the banking system. He noted that approximately 95 trillion dinars, out of a total of 109 trillion, are kept outside of banks. This practice, often referred to as “cash leakage,” limits the country’s economic potential. He explained that the government’s efforts to strengthen e-commerce align with the Central Bank’s goal to integrate this hidden wealth into the financial system.
One of the main objectives of this initiative is to enhance national economic strength. When people deposit their savings in banks instead of hoarding them at home, it leads to increased financial stability and growth. The government’s digital transformation projects, including instant payments, local cards, and unified payment gateways, aim to make financial services more accessible. These efforts are part of a broader strategy to increase financial inclusion and facilitate digital banking operations.Furthermore, Saleh pointed out that the Central Bank has already introduced regulations and procedures to ensure that e-commerce activities are well-organized. These measures help build consumer trust and create a more efficient market environment. He added that as digital payment systems become more widely used, financial institutions will have greater opportunities to offer loans with lower interest rates, which will benefit citizens.
A critical concern in Iraq is the continued practice of hoarding money outside the banking system. This not only affects the economy but also impacts financial behavior. Saleh noted that the informal lending market, where high-interest rates and lack of transparency prevail, poses significant risks to both the individual and the national economy. These activities often involve illegal practices and undermine efforts to combat money laundering.In conclusion, the increased use of digital payment systems offers numerous benefits. It helps to bring hidden wealth into the economy, reduces borrowing costs, and promotes financial inclusion. As the government continues to push for digital transformation, it is clear that these systems will play a key role in the nation’s economic growth and stability.
