ERBIL, Kurdistan Region of Iraq – Central Bank of Iraq (CBI) Governor Ali al-Alaq told The New Region on Wednesday that Baghdad has a "huge plan" to change the banking sector in the next few years, reassuring the Iraqi population that the value of the Iraqi dinar compared to the US dollar is under control.

Alaq urged the Iraqi people to "calm down" and not to "rush to the market," amid a recent soaring rise in unofficial dollar prices, going from around 1,420 dinars per $1 in the black market to 1,570, before settling around 1,500. In comparison, the CBI has set the value at 1,300 dinars per $1.

The fluctuations have created uncertainty and unrest in the Iraqi market, with several videos circulating on social media showing people rushing to currency exchange centers across the country. In response to a question by The New Region regarding a potential problem with the Iraqi dinar's value, Alaq asserted, "not at all."

"We have foreign reserves at a very good level," Alaq said, reassuring that "we are not in a position that we cannot respond to these demands on the American dollars" as Baghdad has purchased large quantities of gold.

The interview came during the launch event of the Kurdistan Regional Government's (KRG) e-Psule initiative, a platform that will allow users to pay their utility bills electronically through several wallets and banks that have participated in the program. 

Alaq praised the KRG's initiative, saying, "It won't change everything, but it will change something for sure."

"Especially, like, when you offer new tools for people, new technology, easy to use and you will save money, you will save time, ... I think you will attract more and more people," the CBI governor said, lauding Kurdistan Region Prime Minister Masrour Barzani's "vision" and "will" toward a cashless economy for the Region. 

Speaking to Iraq's broader strides toward a better banking sector, Alaq said that Baghdad and Erbil are in "close coordination," adding that "the plan we have, really, it's a huge plan. It will change the whole sector."

"We expect that in two or three years we will see a totally different sector," he stressed. "I think one of the biggest plans within the country in general. So, we are very optimistic about the plan."

In late September, CBI announced a plan to end cash payments in government institutions by July 2026, as part of a nationwide shift to electronic payments. 

“Iraq will completely eliminate cash transactions in state institutions and other facilities by July of next year,” Dhurgham Musa, director of supervision over non-banking financial institutions at CBI, told the state newspaper in September.
 
The plan is being carried out under the direct supervision of Prime Minister Mohammed Shia’ al-Sudani and other government ministries, according to Musa, adding that trillions of dinars have already been paid electronically and the interior ministry has completely halted the use of cash.