IRAQ: Waiting for Monetary Reform

03.04.2008
Iraqi Finance Minister Bayan Jabor in his interview with Dow Jones Newswires stated that the Central Bank of Iraq came to a decision to rebase the Iraqi dinar and issue new banknotes in 2008.
Before the US troops invaded Iraq in 2003 the dinar traded at 2500 against dollar. In comparison, in the 1980 state banks traded the dinar at 3 dollars. Currently the dinar is trading at 1230 against dollar (see “Iran and Iraq: Who Will Be the First to Remove Three Zeroes from National Currency Banknotes?” BoW #1, 2008). The Central Bank of Iraq is consistently working on improving the situation of dinar. In particular, the bank is holding daily auctions selling US dollars to private and state banks. The Central Bank officials say that the bank sells from $35 to $50 million US dollars in each auction.
After the fall of Saddam’s regime the temporary Iraqi government decided to issue new banknotes. The Iraqi citizens were given three months to exchange the old notes for the new ones. According to the Central Bank officials, almost 10.000 tons of the old notes were collected and burned during the exchange.
The banknotes currently in circulation were printed by Britain’s “De La Rue”, the world’s largest printer of bank-notes.