[size=36]Al-Sudani's advisor: The cash leakage generated an illegal market that deals with usury and interest[/size]
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the financial advisor to the Prime Minister, Mazhar Muhammad Salih, confirmed today, Wednesday, that the current cash leakage rate is more than 70 percent, while indicating that this leakage generated an illegal market that deals with usury and excessive interest.
Saleh said to the official agency, followed by Mawazine News, that "the customs of settling payments and dealing in paying the prices of transactions within the economic community are still based on a legacy of payment, payment and receipt in cash," noting that "money issued for circulation outside the operations of the banking system is considered a cash leak."
He added, "The aforementioned cash leakage rate amounts to more than 70 percent of the total cash issuance of the Central Bank of Iraq and perhaps more," noting that "this matter does not help monetary policy to apply its tools in monetary stability adequately and comfortably."
He continued, "This is a cash hoarding that deducts from the income cycle and does not help the desired investment spending, in addition to the inactive role of this cash block accumulated outside the banking system, which is exposed to various legal risks, disputes, and assaults on cash ownership rights."
He explained that "if the cash loans provided by the banking system to the public are linked to the goals of economic development and poverty alleviation and with acceptable interest rates provided by bank deposits to the public itself, then the massive cash leakage outside the banking system amounting to more than 70 trillion dinars has made banks shackled to the limits of cash lending." associated with the small deposits of the public they have.”
He stated that "the market and the general population in the private sector are still receiving limited cash lending, which constitutes only 13 percent of the gross domestic product," pointing out that "an important part of that percentage came through the initiatives of the Central Bank of Iraq in the year 2015 and the following years in order to Activating macroeconomic financing and development movement due to the economic recession, although the share of the private sector in bank cash lending in industrialized countries exceeds an average of 106 percent of GDP.
He stated that "the phenomenon of cash leakage and direct cash use came at a time when the world was beginning to switch to digital money that was preceded by electronic payment to reduce transaction costs and raise the efficiency of payments," explaining that "handling liquid cash in our country still constitutes a high cost for cash circulation services, whether in transfers The currency, its calculation, counting and sorting in every single monetary transaction, in addition to the risks arising from the preservation and circulation of large amounts of cash outside the banking system or when settling payments between individuals.
He stressed that "the cash leakage of 70 percent of the current total cash issuance of the Central Bank of Iraq, which amounts to about 70 trillion dinars, has generated an illegal money market that deals with (usury and excessive interest), in which the annual borrowing cost, as illegal cash markets, reaches about 80 percent." annually,” explaining that “the costs are very high for illegal borrowers, which impedes development and increases the costs of unregulated economic activity.” End 29/M99