Getting Money That's Outside the Banks into Iraq's Stock Market
We want to be careful with allowing our IQD to be put into circulation via Iraq's ISX. We are sure that Iraqi citizens are thinking the same thing. Join the channel's Membership to learn more.
A big chunk of Iraq’s money—nearly 20 trillion Iraqi dinars—is kept outside the banking system. These funds are often held in cash or “hoarded,” not deposited in banks. This creates problems because when money is outside banks, it can’t be used to support investment, lending, or economic growth. (Iraq Business News)
The article by Dr. Thaer Mahmoud Rashid discusses how Iraq might draw these “unbanked” funds into the formal financial system by using the Iraq Stock Exchange (ISX). Below is a simpler breakdown of the ideas.
Why Lots of Money Is Kept Outside Banks
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Many people don’t trust banks. Some prefer keeping cash rather than putting it in accounts.
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The banking system is weak in many places: services are limited, rules are unclear, and some banks are small or under-resourced.
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Legal, regulatory, and institutional issues make banking less convenient or reliable for many.
Because of all this, people avoid banks, and that means a lot of money lies idle, not contributing to economic growth.
How the Stock Exchange Could Help
The paper suggests using the stock market (ISX) as a bridge to bring those unbanked funds into the system. Here’s how:
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Allow more people to invest via stock market channels
If people can invest cash into stocks or bonds, their money begins to circulate in the formal economy. -
Introduce “custodian” services
In many countries, custodians are institutions that safely hold assets (like stocks) for investors. Iraq needs such services so that investors can trust their investments are secure. -
Improve regulation & infrastructure
The legal and technical setup must support stock trading, transparency, investor protection, and supervision. -
Engage banks and brokers.
Banks and brokerage firms need to help customers convert their cash into marketable securities. -
Promote awareness & trust
Many people need education on how to use the stock market safely, and trust needs to be built into the system.
Challenges & Risks
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People might still prefer cash if they don’t trust the stock market or institutions.
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The stock market and associated services (custody, trading, regulation) are not yet fully mature.
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Legal, regulatory, and operational gaps can discourage participation.
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Market volatility and risk may deter those with small amounts of money.
Why This Matters
If successful, this approach can:
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Bring a large amount of idle money into economic use.
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Help companies raise capital via the stock market.
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Deepen Iraq’s financial markets and make them more resilient.
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Reduce reliance on informal or opaque financial systems.
The channel is not sure what the Iraqi people will do. However, the channel recommends that Channel Members invest in the ISX using US Dollars and then allow the bank in Iraq to wire the profits back in US Dollars. That way, we do not go against the Iraqi people or ourselves by turning in our IQD banknotes.
Of course it is your choice, but you will need to sign up for the channel's membeship to learn more.
