Baghdad Sees Rise in Currency Exchanges Amid Low Public Trust in Banks

BAGHDAD, Iraq — The number of currency exchange and money transfer offices in Baghdad has increased significantly in recent years. Mazhar Mohammed Salih, a financial advisor to the Iraqi Prime Minister, stated that approximately 87 percent of cash in circulation—nearly 95 trillion dinars—remains outside the formal banking system. Salih noted that this trend limits the banking sector's capacity to provide credit and facilitate investment, reflecting a persistent public preference for holding physical cash. While the Central Bank of Iraq reported that the financial inclusion rate exceeded 40 percent in 2025, many citizens and merchants continue to favor exchange offices for their speed and convenience. Economists have raised concerns that some currency exchange firms are performing unauthorized banking activities, such as issuing loans backed by salary guarantees. These practices reportedly operate outside the scope of the companies' legal mandates.