Iraq Central Bank head praises electronic banking initiative

22-02-2024
Rudaw
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ERBIL, Kurdistan Region - The governor of Iraq’s Central Bank on Thursday praised the efforts of the “electronic collection” banking project to boost electronic payment systems in the country, a move he said would ensure that funds are received faster by the population. 

“This project contributes significantly to enhancing government resources and collecting them in a reliable, safe, and transparent environment, as well as relying on infrastructure for payment systems and electronic payment platforms provided by the Central Bank,” said Ali Mohsen al-Alaq, governor of Iraq’s Central Bank.  

Alaq added that the electronic collection project enjoys significant support from Prime Minister Mohammed Shia’ al-Sudani, who has supported its implementation. 

“This project enables the automation of all collection processes, the adoption of electronic payment tools, and the reduction of cash transactions, which in turn alleviates the burden on citizens by accelerating the payment of cash transactions,” he said. 

One of the contributing factors to the instability of the Iraqi dinar is the absence of an electronic banking system. The Iraqi central government is actively pursuing an e-economy, partnering with companies to transition from the traditional paper-based economy.

Most civil servants in Iraq receive their salaries through their accounts. In the Ministry of Labor and Social Affairs alone, over 300,000 individuals receive electronic payments.

Speaking to reporters after delivering his speech, Alaq called the launch of the electronic collection project “an important pillar for revitalizing electronic payment” and labeled the project’s launch as “very successful.” 

He described the success of the system as a “major goal that seeks to limit the phenomenon of the cash economy,” saying it helps citizens by saving time, reducing costs and labor, and enhancing trust and security. 

In late December, an Iraqi government spokesperson told Rudaw that the country is set to allow electronic financial transactions within government institutions in 2024. 

The decision to turn most of the transactions electronic constitutes an attempt by the government to prevent money laundering and smuggling of dollars outside of Iraq.

The Iraqi dinar has been losing value against the US dollar for several months, leading to a surge in prices of basic goods and consequent outcry from the Iraqi public. The depreciation has been attributed to the smuggling of dollars out of Iraq, mainly to neighboring Iran.
 

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