Financial Reform Challenges in Iraq: Billions Remain Outside the Banking System Amid Calls for Digitalization

The reform trajectory of Iraq's banking sector faces persistent challenges that hinder efforts to build an advanced financial system capable of stimulating investment and supporting comprehensive development. Despite the expansion of loan and credit programs, the lack of transparency and effective oversight, coupled with limited reliance on digital technologies, has resulted in citizens continuing to keep billions of dinars outside official vaults. Economic experts argue that overcoming this crisis requires transitioning to a modern banking ecosystem, establishing unified credit databases to reduce default rates, and activating electronic payment tools to minimize administrative bureaucracy. This would enhance public trust in the financial system and achieve funding sustainability away from traditional cash transactions.