Iraq keeping banknotes unchanged throughout 2013

Iraq keeping banknotes unchanged throughout 2013


Iraqi dinar denominationsIraq’s Central Bank will not remove three zeros from its currency, the dinar, a move it had said it wanted to implement in 2013.

The bank had drawn up plans to start replacing current banknotes with new ones, deleting three zeros and reducing the volume of dinars in circulation with each four billion dinars substituted by one billion dinars.

“The Central Bank has announced that it has no intention to restructure the currency by removing three zeros from its value this year,” said Abdulhusain al-Yaseri, a deputy who sits on the parliament’s Finance Commission.

Currently one U.S. dollar is worth more than 1250 dinars and Yaseri said Iraqis needed to carry large sums of currency even for household shopping as payment by credit card is rare in Iraq.

Issuing new denominations with deleted zeros will simplify payment and accelerate trade exchanges, he said.

However, Yaseri did not say when the Central Bank will start issuing new currency.

He said the massive sum of banknotes in circulation raised the possibility of faked banknotes and has been cited as one reason for the latest slump in the dinar’s value from around 1120 to more than 1250 vis-à-vis the U.S. dollar.

However, he said the bank had in place a plan to remove three zeros from the dinar, and issue a 100 dinar note that will be equivalent to $100.

He said it was in Iraq’s interest to print new currency with lower denomination, the thing that “will make easier to detect forgeries.”

Exchanging currency by increasing its value or printing new notes are costly to the economy, though the Central Bank has not said how much the whole operation will cost if carried out.

There are also fears of corruption as the banks starting exchanging their Iraqi dinar reserves.