Iraq Economic News and Points To Ponder Monday Evening 8-17-26
Iraqi PM Advisor: Digital Dinar a ‘Promising Strategic Project’
Daban Mohammed At a Glance
The Iraqi PM advisor described the digital dinar as a strategic initiative designed to enhance monetary policy and improve liquidity management.
The advisor clarified the digital currency is a legal tender extension of the paper dinar.
The official cautioned the project is not a direct remedy for structural macroeconomic imbalances.
Lawmakers proposed distributing state salaries directly into citizen digital wallets.
Mudher Muhammad Salih, advisor to the Iraqi Prime Minister, identified the proposed digital Iraqi dinar as a strategic initiative to boost monetary policy efficiency, enhance liquidity management, and modernize government payment systems.
Key Statement and Focus Area
The PM advisor noted, "The proposal to launch the digital Iraqi dinar is one of the ideas worth studying within the framework of Iraq's orientation towards digital transformation and developing the financial system."
Salih stressed that "the launch of the digital Iraqi dinar represents a promising strategic project, but it is not a substitute for economic and financial reforms; rather, it is a part of them."
"The Central Bank of Iraq has made significant strides in the digital transformation path by expanding electronic payment systems, digital wallets, and point-of-sale (POS) devices, as well as linking banks to modern settlement systems," he added.
Speaking to state media, the Iraqi News Agency (INA), Salih said a digital dinar issued by the Central Bank of Iraq (CBI) with legal tender status could enhance monetary policy and liquidity management.
Salih explained that the initiative introduces a "digital version of the Iraqi dinar" for electronic trading while maintaining a value "equal to the paper dinar."
He clarified that the sovereign digital currency does not introduce a new currency, but rather creates a "digital version of the Iraqi dinar" available for electronic trading via digital wallets and bank accounts while remaining "equal to the paper dinar."
The digital currency aims to reduce cash reliance, cut operational costs, and counter financial corruption like tax evasion. However, Salih cautioned against viewing the digital dinar as a direct solution to Iraq's structural liquidity crisis.
He emphasized that the project serves to improve cash management efficiency rather than remedy broader macroeconomic imbalances.
The advisor highlighted that these measures form the foundation for a future sovereign digital currency. However, he noted that the transition requires completing legal frameworks, strengthening cybersecurity, and upgrading technical infrastructure.
Salih mentioned that paying employee and retiree salaries digitally is already "technically possible" due to existing widespread bank card enrollment. In the future, the government can study depositing funds directly into accounts linked to the digital dinar to limit the risks of "handling funds in cash."
He underlined that success depends on nationwide banking expansion, more payment devices, improved internet services, and higher "digital financial literacy" to ensure "community acceptance" and security.
FYI
The proposed digital Iraqi dinar aims to modernize capital movement and address a severe, structural liquidity paradox in the country.
To combat the hoarding of an estimated 70% to 80% of currency outside the banking system, legislators suggestsd to distribute government salaries directly via the digital dinar, bypassing the physical cash gridlock.
On Friday, August 7, lawmaker Saad al-Awadi formally proposed launching the digital Iraqi dinar to secure and distribute state employee and retiree salaries directly into digital wallets.
The explicit intent of this legislative push is to bypass the physical cash bottleneck and secure immediate purchasing power for citizens. https://channel8.com/english/news/63999
Raq’s Government Has Not Decided To Remove Zeros From The Currency,
Zoom News @zoomnewskrd #BREAKING: Iraq’s government has not decided to remove zeros from the currency, spokesperson Haider Al-Aboudi says, adding that any such move would require legislation from Parliament.
Iraq: Increased Demand For The Dollar Following Leaks About Changing The Dinar.
Demand for the dollar is high in the Iraqi market amid expectations of currency change and a rising exchange rate.
August 17, 2026Last updated: August 17, 2026
Al-Mustaqilla - An informed source revealed to Al-Mustaqilla that there has been a noticeable increase in demand for the dollar in the Iraqi market in recent hours, coinciding with escalating talk and leaks regarding a government plan to make changes to the Iraqi currency in the coming period.
The source said that the increased demand for the dollar is mainly due to the anxiety caused by the statements and leaks circulating about the project to change the Iraqi dinar, and the new monetary and financial measures that may accompany it.
According to the source, some market participants are converting part of their savings from dinars to dollars, in anticipation of any possible changes in the currency trading mechanism or exchange rates, which may increase demand for foreign currency and increase pressure on the dollar exchange rate in the parallel market.
The source indicated that there are expectations of a rise in the dollar exchange rate against the dinar during the next period if the demand for the dollar continues, stressing at the same time that the size and extent of the rise are linked to the measures that may be taken by the government and the Central Bank of Iraq, as well as the level of supply and demand in the market.
These developments come at a time when controversy is growing over the restructuring of the Iraqi currency and the removal of zeros, amid information circulating about preparations to issue a new currency and replace the current currency according to specific timeframes.
Conversely, any official change to the currency or exchange rate requires decisions and procedures announced by the competent authorities, and leaks circulating alone cannot be considered evidence of the project's implementation.
Iraqi markets are awaiting the position of the Central Bank and the government regarding this information in the coming days, especially since any official announcement regarding the currency or exchange rate would directly affect the movement of the dollar and local markets.
Iraq: Increased demand for the dollar following leaks about changing the dinar.
"A Sick Currency" In New Clothes... Will Removing Zeros Save The Dinar Or Just Beautify The Crisis?
Information / Report... From time to time, the proposal to remove zeros from the currency and replace them as a solution to end inflation and simplify accounting transactions is raised in Iraqi economic and political circles.
With fluctuating exchange rates, the current cash liquidity crisis, and the pressures of public debt, the Iraqi citizen finds himself torn between government promises of stability and the very real fears of inflation.
Will changing the local currency and removing its zeros represent a genuine lifeline for the ailing economy, or is it merely a cosmetic measure for a sick currency that will not address the root causes of the structural financial crisis plaguing the country?
Supporters of this measure believe it offers significant organizational and psychological benefits, most notably facilitating accounting transactions and reducing the astronomical figures in public budgets, bank accounts, and daily sales and purchase statements.
Moreover, it would restore confidence in the Iraqi dinar by giving it an appearance of strength and high value against foreign currencies like the dollar, thus improving investor confidence.
Additionally, it would alleviate logistical burdens by reducing the volume of circulating cash and saving on printing, transporting, and storing it, and would compel citizens to bring hoarded cash at home into the formal banking system to combat the shadow economy.
Conversely, economists warn that removing zeros from the currency could become a mere illusion with potentially disastrous consequences, as it fails to address the root causes of the structural crisis linked to Iraq's total dependence on oil.
Furthermore, the process of withdrawing the old currency and printing and distributing the new denominations would be prohibitively expensive, and could potentially cause market instability, driving citizens to seek refuge in dollars or gold out of fear of economic collapse.
In this context, economist Abdul Rahman al-Mashhadani emphasized on Monday that the decision to remove zeros and change the local currency falls exclusively under the purview of the Central Bank of Iraq. He cautioned against taking this step amidst the current financial crisis, given its potentially negative repercussions on the market.
Al-Mashhadani told Al-Maalouma News Agency, “The idea of removing zeros and changing the currency is not new; work on it and a comprehensive study on it have been underway since 2012.” He added that the justifications recently put forward, claiming the move aims to control the funds of corrupt individuals, are illogical and impractical.
He pointed out that "changing the currency will not have a direct impact on the big corrupt figures and those hoarding ill-gotten gains, as they have many ways to circumvent the decision, including distributing the funds to relatives and close associates or recruiting people to transfer them in exchange for financial commissions."
He added that "the currency replacement process will take at least seven months at best, and requires the Central Bank to develop a new structure and designs, which will be subject to in-depth discussions." He explained that "the printing process is not local but is linked to a British company, and the denominations are printed in four countries: France, Britain, Spain, and India."
Al-Mashhadani clarified that “the replacement process needs specific and well-regulated banking outlets to prevent overcrowding, chaos, and exploitation by unscrewulous individuals.” He revealed that "the amount of money hoarded outside the banking system is enormous and estimated to be Approximately 92 trillion dinars."
For his part, Murtadha al-A'ajibi, a member of the Iraqi Foundation Coalition, confirmed on Monday that talk of removing zeros from the Iraqi currency is actually a proposal being discussed, indicating that there are no current government efforts or plans to implement it.
Al-A'ajibi told Al-Ma'louma news agency, "The talk about removing zeros from the Iraqi currency is just a proposal being discussed, and there are currently no government efforts or actual plans to implement this step," explaining that "the matter has not yet reached the stage of implementation procedures."
He added that "removing zeros does not represent a solution to the financial crisis that Iraq is suffering from, nor can it address the root of the economic problem," noting that "addressing the financial situation requires real and well-considered measures that target the causes of the crisis, rather than resorting to superficial solutions."
Al-A'ajibi pointed out that "such steps do not contribute to addressing the financial crisis, but rather are merely stopgap solutions that do not fundamentally address the economic problems." He stressed the necessity of "focusing on economic and financial reforms that would address the root causes of the imbalances and enhance the stability of the Iraqi economy". End/25