Iraq's Banking Sector Reaches a Turning Point in Its Reform Drive

Mudher Mohammed Saleh, economic adviser to Iraq's prime minister, told Shafaq News in a report published Saturday, 7 Shahrivar 1405 (August 29, 2026), that Iraq's banking sector has reached a critical crossroads after years of weak management, oversight failures and declining public confidence, and that reform can no longer be delayed, particularly in an economy that depends heavily on oil for foreign currency. He called for stronger governance, tighter supervision, adherence to anti-money-laundering and counter-terrorist-financing standards, and bank capital increases matched to risk levels.

Per the report, the Central Bank of Iraq's reform program, developed with global consultancy Oliver Wyman, offers banks paths including staying in business, merging, or exiting the market; seven Iraqi banks have already entered the program's first phase and been allowed to resume transactions in non-dollar foreign currencies. Economic expert Ahmed Al-Janabi said in the same report that currency issued by the Central Bank of Iraq totals about 103 trillion dinars, of which roughly 20 trillion dinars remains outside the banking system, much of it kept in homes.