HOARDED WEALTH, FROZEN ECONOMY: IRAQ’S HIDDEN CASH CRISIS DEEPENS

 HOARDED WEALTH, FROZEN ECONOMY: IRAQ’S HIDDEN CASH CRISIS DEEPENS

For many Iraqis, banks are not seen as safe havens but as unreliable or even risky institutions. And for countless others, personal experiences of fraud and failed investments have reinforced the instinct to hide money away rather than let it work.

In a country long battered by war, corruption, and economic volatility, a new crisis is quietly suffocating Iraq’s prospects for recovery: the nation’s wealth is being locked away behind household doors.

Recent figures reveal that only 20 trillion Iraqi dinars are in actual market circulation out of a staggering 105 trillion dinars in total monetary volume—a sign that Iraqis are overwhelmingly choosing to hoard their savings at home rather than invest or deposit them. This growing phenomenon not only reflects deep societal mistrust but also poses a formidable obstacle to economic growth.

The roots of this behavior run deep. For many Iraqis, banks are not seen as safe havens but as unreliable or even risky institutions. And for countless others, personal experiences of fraud and failed investments have reinforced the instinct to hide money away rather than let it work.

Ahmad Alaa, a young Iraqi man, shared his own story with Kurdistan24’s correspondent Seif Ali—a cautionary tale that mirrors the fears of many. “After saving a significant amount, I tried investing in the car trade through a partnership. I was defrauded. Even after two years in court, and a confession from the person who stole our money, he walked free,” Alaa said. “After that experience and others like it, people are too scared to invest.”

Ahmad Alaa, a young Iraqi man, shared his own story with Kurdistan24’s correspondent Seif Ali. But fear of fraud is only part of the equation. Experts point to a fragile banking system, unpredictable exchange rates, and mounting economic pressures as factors pushing citizens further into financial isolation.

Economic analyst Arkan Al-Shammari explained to Kurdistan24, “The economic downturn and instability of the dollar discourage citizens from launching small businesses. Even those who want to invest face high operational costs—particularly rent—which make ventures unfeasible from the outset.”

Economic analyst Arkan Al-Shammari talking to Kurdistan24’s correspondent Seif Ali.

With banks offering little in the way of guarantees or incentives, and with Iraq still lacking a secure and modern banking infrastructure, citizens are left with few appealing options for managing their money.

Al-Shammari argued that revamping the financial system and offering substantial incentives could be key to drawing hoarded funds back into the economy. “Without an encouraging banking environment, it’s unrealistic to expect people to trust the system with their life savings,” he said.

The consequences are stark. As Iraq faces pressing needs in reconstruction, job creation, and diversification of its economy, massive reserves of personal wealth remain immobilized—kept in cash, hidden in homes, and denied to the markets and sectors that need them most.

In the absence of sweeping financial reforms, Iraq risks falling further behind in its efforts to build a resilient and modern economy. For now, the country’s future remains shackled not only by visible challenges, but also by the invisible weight of idle cash—locked in fear, distrust, and lost opportunity.