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Iraq Plans Deposit Guarantee Fund to Curb Cash Stashing - ASHARQ AL-AWSAT English Archive 2005 -2017
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The Iraq central bank revealed a plan to set up a deposit guarantee fund in order to encourage Iraqis to use banking services and to develop the financial industry.

An estimated 30 trillion dinars ($25.71 billion) in cash are held outside the Iraqi banking system, according to a central bank statement received on Wednesday. About 10 trillion dinars only are kept in the banking system.

Since the overthrow of Saddam Hussein in 2003, Iraq has been prey to war and insurgency. As a result, Iraqis became reluctant to use banks fearing that violence may prevent them to access their cash or restrictions on withdrawals.

Many Iraqis also worry they that might lose their savings in the event of a bank collapse.

Last year, the government stopped payments to bank branches in areas held by ISIS, the militant group that controls swathes of territory in northern and western Iraq.

The central-bank supervised fund will have a capital of 100 billion dinars and will collect a certain percentage of the deposits held by the private and state-owned banks, it said, without indicating the amount.

About 70 percent of total private sector bank deposits are now held in state banks, according to the central bank. ($1 = 1,167.0000 Iraqi dinars)