(Post by Debbie, The IQD Team)
Iraq Coinage One Step Closer to Reality
By Richard Giedroyc,
World Coin News
October 18, 2011 This article was originally printed in World Coin News.
Iraq may soon see its first circulating coinage since 2004, but it might be quite different from what was used in the past.
Alsumaria Iraqi satellite television reported on Sept. 3 that, “The denomination of the Iraqi currency reached its final stages as the study and draft resolution reached the Cabinet after being sent by [the] Iraq Central Bank. Iraq Central Bank said that it won't only delete the zeros, but it will also change Iraq monetary structure in order to provide bigger currencies. According to this project, coins will appear again in the Iraqi currency. As for the bank notes, the Central Bank will recourse to international institutions to print them.”
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In a further reform, the central bank announced that the new bank notes will be printed in three languages, one of which will be Kurdish. The Kurds live primarily in northern Iraq and were enemies of the Saddam government and pro-Saddam insurgents who fought coalition troops following Saddam’s overthrow.
The new notes will carry vignettes from Iraqi civilization rather than Saddam’s portrait, which has appeared on notes in the past. Nothing was said regarding the coins and if they too will carry three languages.
The central bank stressed the changes are meant to decrease the enormous amount of currency it takes to make cash transactions, but it should not impact the purchasing power of the dinar. Plans call for three zeroes to be removed from all existing bank note denominations.
Coins were initially introduced in modern Iraq when Iraq was an independent kingdom, during 1931 and 1932. The coins were issued in denominations of 1, 2, 4, 10, 20, 50 and 200 fils. The 200-fils coin is also known as a rial. In 1953, a 100-fils coin was added to this mix.
A new series of coins initially in denominations of 1, 5, 10, 25, 50 and 100 fils was issued at the time of the establishment of the Iraqi Republic, with 250 fils coins being added in 1970 and 500 fils and 1 dinar coins in 1982. All Iraqi coin production ceased after 1990.
The Coalition Provisional Authority that followed the overthrow of Saddam authorized new coins and bank notes. In 2004, 25-, 50- and 100-dinar coins were introduced, however they proved to be unpopular and were quickly withdrawn.
Coins and low denomination bank notes are a problem since due to inflation, they have little purchasing power. Iraq’s highest currency denomination is the 25,000-dinar bank note, which has an exchange value of about $21 U.S. It will take a currency reform in which three zeros are removed from each existing denomination to make it practical for coins to circulate. Such a currency reform will also benefit the Iraqi government, since the government will be able to spend less on future bank notes when low denomination notes are once more able to circulate.
It is expected it will take three years for a currency reform to become a reality. Nothing was immediately available regarding where future coins or bank notes might be produced.
Iraq’s currency has been impacted by severe fluctuations in the economy between the later years of Saddam’s dictatorial rule and today. Economic sanctions imposed on the regime caused rampant inflation, which was quickly coupled with massive counterfeiting of bank notes, while all coins vanished from circulation.
Once the Saddam regime was blocked from receiving new supplies of high quality bank notes from overseas, the poorer quality notes produced domestically became the target of domestic counterfeiters. It has never been proven, but there is a possibility foreign countries also sanctioned counterfeit Iraqi dinar bank notes as well.