Economy Update – Baghdad
Mazhar Mohamed Saleh, the Financial Adviser to the Prime Minister, expressed strong support for the Central Bank of Iraq’s initiative to issue a digital currency. He characterized this move as a significant advancement that will improve transparency, control financial flows, enhance capital oversight and foreign transfers, and bolster anti-money laundering measures.
Saleh stated, “The central bank is moving towards the gradual introduction of a digital currency as an alternative to traditional paper currency.” He emphasized that “this approach represents a transformative step in the evolution of the national digital payment framework.”
He elaborated on the multitude of advantages this initiative will provide, including minimizing cash leakage, lowering printing costs, and curbing the circulation of paper currency outside the banking system. Additionally, it aims to decrease the frequency of money printing, which in turn will reduce costs associated with the production and distribution of currency. This transition is also expected to enhance transparency and facilitate better tracking of digital liquidity and spending trends, whether for consumption or savings, thereby improving capital control and external transfers while supporting anti-money laundering efforts.
Moreover, Saleh noted that digital currencies play a vital role in achieving financial inclusion, particularly for segments of the population that are currently underserved by the banking system. This inclusion is essential for fostering both economic and social integration.
He underscored the necessity for a robust technical infrastructure to support the transition to digital currency. This infrastructure should encompass reliable and advanced internet networks and sophisticated cybersecurity systems to safeguard data and transactions. Additionally, it is crucial to promote a culture of acceptance for digital currencies within society, starting with governmental agencies using them for official transactions.
Saleh concluded by explaining, “Digital currency will retain its classic functions as a unit of account for payments and savings, which can be utilized through the internet and smartphones, ultimately contributing to a more stable and efficient financial ecosystem.”
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