CBI decided to start the restructuring process of the Iraqi dinar including the establishment of coins in collaboration with global companies and economists. CBI will introduce coins of 500 and 1000 dinars in the next three months.
The Central Bank discussed with various global organizations and experts before taking the decisions of introducing the new dinars and developing coins.
CBI announced that the restructuring plan was ready, and the bank would reprint 30 trillion dinars.
Mohammed Saleh, a CBI’s expert stated that the remaining problem was choosing the appropriate time for the Iraqi dinar exchange in order to avoid any obstacles.
The decision of lifting the three zeros from the currency came after the increase of inflation and the economy declension during the nineties. The dinar value decreased over time until it reached the current value of 1120 dinars per dollar.
In order to maintain the dinar exchange rate, the Central Bank organized in 2003 a foreign auction to sell dollars from the oil field and transfer the money to the bank to sell in local currency. This mechanism increased the dinar’s value with more than 2000 points.
After the deleting zeros, CBI needs to reduce the number of bills in circulation to facilitate the Iraqi payments system.
Although, Saleh prevented authorities that the replacement process could lead to acts of corruption due to the weak banking sector, he also pointed out that the previous restructuring process occurred in 2004 was a success.
Furthermore, Adnan Salman affirmed that Iraq was still unsafe for the deletion process due to its various issues. The country is going through a difficult situation in several areas such as political sector, economic and social. The inflation which caused several damages, the basic private sector, the security issues and the declension of the agricultural sector are the main drawbacks that require attention before starting the restructuring process.
He also said that the Iraqi citizens can not handle this process due to the consequences of the high inflation, the unemployment and the instable region. The lifting process is not compatible with the living standards and could cause confusion among citizens.
In these circumstances, economists and politicians agreed that they should postpone the replacement process until the U.S. troops left the country. They also should evaluate the deletion of the three zeros from dinars, and then transfer it to the parliament which would establish a law to display all the problems that this process could raise.
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