Banks In Iraqi Kurdistan "Out Of Cash"

Raouf also believes local authorities should take some of the blame. They haven’t tried to support a stable financial system nor have they tried to do anything about this recurring problem of liquidity.

“The solution is not that difficult,” Raouf says. “But local authorities don’t seem to understand how much of a problem this is and how much suffering it causes.”

Meanwhile Mohammed Raouf, a professor of economics at the University of Sulaymaniyah, believes the crisis may have been created deliberately. “Iraq’s Central Bank specifies how much cash a bank must have in reserve, in order to carry out its daily business,” Raouf explains. “If the bank doesn’t have enough cash in reserve, then it is, to all intents and purposes, bankrupt. I believe that those in power are holding the cash up somewhere along the way so they can retain their control on it.”

The professor may well be right. The Iraqi Kurdish Minister of Finance, Baez Talabani, announced that local banks don’t have enough cash because Baghdad isn’t sending as much hard currency as it should.

Despite efforts by both the banks and various investment houses to try and shore up confidence in monetary institutions in Iraqi Kurdistan, nothing really seems to have helped: a lot of locals still prefer to keep their money at home.

Fattah Nouri is one of these. The 60-year-old recently sold some land he inherited but instead of going to a bank, he’s keeping the money safe at home. “I’m planning to buy some more property and I’m afraid that when the time comes the bank will just tell me they don’t have the cash,” he explains. “And if that happens I might lose the opportunity to buy the property I want. I know it’s risky but I’d rather keep the money at home than in a bank.”

(Dinar image via Shutterstock)