The banking system is under pressure due to lost confidence, and the central bank faces crucial choices to rescue liquidity.
The banking system is under pressure due to lost confidence, and the central bank faces crucial choices to rescue liquidity.
12-6-2025
Information / Report…
The Ministry of Finance is experiencing a severe liquidity crisis that has led to delays in salary payments. Despite the abundance of cash in the market, the majority remains hoarded in citizens’ homes, away from government and private banks, due to declining confidence in the banking sector.
Financial experts believe that reviving the national economy hinges on rebuilding trust between citizens and the banking system and encouraging saving instead of hoarding funds outside the economic cycle. They emphasize the need for strict administrative and legislative measures to guarantee depositors’ rights and impose rigorous oversight on banks, asserting that the fragility of the banking environment has hindered financial institutions from fulfilling their normal role.
Specialists urge the Central Bank to take more decisive steps against non-compliant banks, not merely monitoring cases of refusal to release deposits, and to develop incentive programs that encourage citizens to deposit funds and contribute to supporting development.
Economic expert Basil al-Ubaidi called for the establishment of a specialized banking company to guarantee depositors’ funds and enable them to withdraw at any time, considering the lack of guarantees a direct cause of the liquidity crisis.
Al-Ubaidi told Al-Maalomah that “encouraging citizens to deposit their money and invest it in development projects can benefit the citizen, the bank, and the state, but it requires restoring confidence in banks through clear programs that guarantee unrestricted withdrawals.” He explained that the proposed company should have a strong financial base and ideally be a mixed public-private sector entity.
Financial expert Mohsen Abdul Jalil considered the “backwardness of the Iraqi banking system” a major factor in foreign companies’ reluctance to invest in the country.
In a statement to Al-Maalomah, he explained that developing the banking infrastructure to meet international standards has become essential to attracting investments, emphasizing that promoting a culture of depositing and investing funds within the financial system contributes to supporting economic development.
Experts agree that addressing the crisis begins with specific measures from the Central Bank, and that restoring confidence in Iraqi banks is the cornerstone for the return of liquidity and the revitalization of the economic cycle.
almaalomah.me
