Money is stored in their homes.. Why do Iraqis not trust their banks?

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[size=52]Money is stored in their homes.. Why do Iraqis not trust their banks?[/size]

[size=45]Over the past decades, Iraqis have refrained from saving or depositing their money in banks for many reasons, which has left the majority of cash in Iraqi currency outside banks, whether government or private, causing a financial crisis for years.[/size]
[size=45]Following the US invasion of Iraq in 2003, widespread looting drained banks of liquidity. More than 70 banks have been established since then, but the sector as a whole has not developed.[/size]
[size=45]Many experts in Iraq attribute the Iraqi citizen's lack of confidence in the banking system to many reasons, the most prominent of which is the lack of credibility of the infrastructure of banking systems of all kinds by Iraqis, despite the fact that Iraq has 86 government and private banks.[/size]
[size=45]Abdul Rahman Al-Mashhadani, a professor of economics at the University of Iraq, points out that the percentage of Iraqis hoarding their money is close to 77% of the total monetary mass in the country, with the absence of automated teller machines and points of sale (BOS) in stores.[/size]
[size=45]complex procedures[/size]
[size=45]Al-Mashhadani believes that the banking system does not have the ability to attract depositors and preserve their money, let alone treat them well, which has led since the nineties of the last century to all governments resorting to stopping depositors’ withdrawals during times of crises.[/size]
[size=45]In a press interview, Al-Mashhadani revealed that the Anti-Money Laundering and Anti-Terrorism Law was applied with great injustice to Iraqis, as opening any bank account requires filling out complex forms and questions about the source of the funds, in addition to the bank’s request for the depositor to bring a guarantor to guarantee him in a step he described as “illogical.”[/size]
[size=45]Regarding the reason for the absence of prestigious foreign banks in the country, he points out that the Central Bank stipulated that foreign banks should have a capital of $50 million and that their goal should be to enter the field of development, but some of them exploited their presence to smuggle money, in addition to the fact that allowing them to enter the foreign currency auction (buying dollars directly from the Central Bank) transformed their work from development and lending to seeking profits after the Central Bank allowed them to buy $5 million per day at an exchange rate of (1190 dinars per dollar), which is 40 dinars less for every dollar sold on the black market.[/size]
[size=45]Digitization of banks[/size]
[size=45]Meanwhile, the expert in financial and economic affairs, Nawar Al-Saadi, revealed the importance of the benefits of “digitizing” financial transactions for Iraqi banks, while pointing out that digitization can enhance financial inclusion by attracting users who do not deal with traditional banks by providing easy-to-access and easy-to-use services.[/size]
[size=45]“Digitizing financial transactions in Iraqi banks can provide significant benefits, especially in terms of reducing currency smuggling,” Al-Saadi said, noting that “by adopting digital systems, banks can track all financial transfers with greater accuracy and transparency. This means that every transaction is automatically recorded and saved in a central database that can be reviewed at any time. This allows the relevant authorities to monitor and quickly detect suspicious financial activities, making it difficult for smugglers to exploit the financial system to smuggle currencies.”[/size]
[size=45]“Digitizing the banking system contributes to reducing money laundering cases, as these operations usually depend on exploiting loopholes in traditional systems, but with the presence of an advanced digital system, these operations become more complex. Digitization also allows the use of advanced technologies such as artificial intelligence to analyze patterns in banking data and identify any abnormal or suspicious transactions,” he added, stressing that “this helps prevent money laundering by early identification of unusual activities and reporting them to the competent authorities.”[/size]
[size=45]Al-Saadi explained that “to implement this digital transformation in Iraq, there is a need for investments in technological infrastructure and developing the institutional capabilities of banks,” noting that “this requires providing modern technology, training employees to use it effectively, in addition to developing legislation and laws that protect users and encourage digital transactions. It is also important to enhance customer awareness of the benefits of digital transactions and build their confidence in the new systems.”[/size]
[size=45]He stressed that “digitization in banks contributes to achieving more transparency and credibility in the financial system, as each transaction can be easily tracked and reviewed. It also improves the operational efficiency of banks by completing transactions faster and at a lower cost. In terms of security, digitization provides higher levels of protection against fraud and theft through advanced encryption technologies.”[/size]
[size=45]The financial and economic expert concluded by saying, “Digitization can enhance financial inclusion by attracting users who do not deal with traditional banks by providing easy-to-access and easy-to-use services. Digitizing financial transactions in Iraqi banks also has great potential to enhance economic stability and reduce the risks associated with money laundering and currency smuggling, leading to a safer and more efficient financial system.”[/size]
[size=45]Between cash and electronic payment[/size]
[size=45]Cash payment is still prevalent in the country, despite the announcement of the electronic payment system. Until now, employees and retirees receive their full salaries from exchange shops spread across residential neighborhoods, instead of having automated teller machines, which has emptied the government’s approach to controlling the flow of money of its content, in addition to burdening the citizen with paying commissions to these outlets and causing him the trouble of going to them and standing in long queues sometimes.[/size]
[size=45]For his part, financial researcher Mustafa Akram Hantoush explains that “the government’s goal in working with the electronic payment system is to combat money laundering and other suspicious financial activities, but so far this goal has not been achieved, as dealing with this system by citizens and merchants is almost non-existent, and the first reason is the lack of a culture of dealing with this method of payment among citizens.”[/size]
[size=45]He stressed that “dealing through electronic payment has great economic importance, the first of which is ensuring stability in local markets. This trend also increases the rate of financial inclusion in the country, and raises citizens’ confidence in the banking sector, which is positively reflected on the national economy in general.”[/size]
[size=45]He points out that “there are many complaints from employees about the way salary withdrawal offices deal, especially since the continued existence of these offices means the continuation of cash transactions.”[/size]
[size=45]Monthly increase and yearly decrease[/size]
[size=45]The head of the “Iraq Al-Mustaqbal” Foundation for Economic Studies and Consultations, Manar Al-Obaidi, said in a post on Facebook that current deposits, which represent about 80% of deposits, increased by an annual growth rate of 6.68% and a monthly growth rate of 1.67% to reach 104.55 trillion Iraqi dinars, while savings deposits, which represent 12.74% of total deposits, despite the monthly growth rate increasing by 0.9%, decreased on an annual basis by a decrease rate of 4%, to reach a total value of 16.2 trillion Iraqi dinars.[/size]
[size=45]He added, "As for fixed deposits, which represent 7% of total deposits, they decreased on a monthly basis by 0.29% and on an annual basis by 11.84% to reach 9.13 trillion Iraqi dinars. As for the sources of deposits, private sector deposits occupied the highest percentage at 43% of total deposits with a total value of 55.89 trillion Iraqi dinars and increased on an annual and monthly basis by 2.38% and 1.54%, according to Al-Obaidi."[/size]
[size=45]According to Al-Obaidi, central government deposits, which represent 34.3% of the total value of deposits, increased by 5.49% on a monthly basis and 10.85% on an annual basis, reaching a total value of 44.63 trillion Iraqi dinars, while public institutions’ deposits, which represent 22.6% of the total value of deposits, recorded a decrease in the monthly growth rate of 4.33% and a decrease in the annual growth rate of 3.38%, reaching a total value of 29.36 trillion Iraqi dinars.[/size]
[size=45]It is noteworthy that the Iraqi banking sector is neglected by citizens who have lost confidence in it. According to World Bank figures, only 23 percent of Iraqi families have an account in a financial institution, which is one of the lowest percentages in the Arab world, especially since the owners of these accounts are government employees whose salaries are distributed to public banks at the end of each month. However, these salaries also do not remain in the accounts for long, as queues quickly form in front of banks from employees who withdraw their salaries in cash and prefer to keep them at home.[/size]
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