Understanding the Project to Delete Zeros from the Iraqi Dinar in 2024
The Central Bank of Iraq (CBI) has been considering the deletion of three zeros from the Iraqi dinar since 2003, a project that has sparked significant public and professional debate. The goal of this initiative is to simplify financial transactions and boost confidence in the national currency, a move that has been observed in several countries around the world.
The Central Bank of Iraq's Perspective
According to the Governor of the Central Bank, Ali Al-Alaq, the project to delete zeros from the currency remains a priority. This policy involves replacing a one-thousand note, valued at 1,000 dinars, with a new note worth one dinar, effectively removing three zeros from the currency. The rationale behind this move is to simplify transactions and make financial amounts more digestible for individuals and companies, reducing the need to deal with large numbers.
Global Precedents and Examples
Iraq is not alone in resorting to the policy of deleting zeros from its currency. Since 1960, there have been 70 instances worldwide where countries have implemented similar measures. Notable examples include Türkiye, which removed six zeros from its currency in 2005, Zimbabwe, which deleted twelve zeros in 2009, and Venezuela, which eliminated five zeros in 2018.
Potential Economic Implications
Although the actual value of money does not change post-zero deletion, the step contributes to streamlining buying and selling processes. For instance, instead of handling one million Iraqi dinars, individuals would deal with one thousand dinars. This simplification can also facilitate the issuance of small currencies like coins, enabling goods to be priced more affordably.
Economists' Divergent Views
Economists are divided on the potential impacts of the zero deletion project. Supporters argue that it could help decrease inflation and unemployment, while critics warn of potential economic shocks. Challenges include security concerns, an open market susceptible to foreign commodities, counterfeit money, and widespread corruption. Moreover, some suggest that removing zeros alone cannot effectively combat inflation and should be part of a broader set of economic reforms.
Lessons from Other Countries
Analysts recommend studying the experiences of countries like Turkey and Argentina, where zero deletion policies have had varying degrees of success. Turkey's experience is often cited as a successful case study of changing national currency policy, following substantial reformative policies and social changes.
Challenges and Considerations
Potential challenges include the costs of printing new currency, updating accounting systems, and training the public on how to use the new currency. Mismanagement of the deletion process could lead to economic disruptions and initial confusion among residents and consumers.
Preparation and Timing
The Iraqi economic environment is said to be ready for the project if the necessary will is present among decision-makers. Choosing the appropriate timing is crucial to ensure the project's success.
Central ank's Progress
In 2011, the Iraqi Central Bank announced that the project to remove three zeros from the dinar was nearing completion. This strategic plan aimed to reduce transaction costs and ease the burden of carrying large amounts of cash.
The project to delete zeros from the Iraqi dinar in 2024 is a complex endeavor with potential benefits and challenges. Its success will depend on careful planning, execution, and coordination with broader economic reforms.
SOURCES:
https://www.al-monitor.com/originals/2013/10/dinar-currency-iraq-plans.html
https://www.linkedin.com/pulse/deleting-3-zeros-from-iraqi-dinar-mohammed-al-kaisi/
