This week, the Central Bank of Iraq announced its intentions to redenominate its currency and print a new series of banknotes by September 2012.
According to an article published by The Kurdish Globe, the central bank will introduce three new banknotes: 50 dinars, 100 dinars and 200 dinars.
The denominations are a change from old Iraqi currency as the country prepares to undergo a redenomination process, said Economic Committee Member of Parliament Abdul-Hussein Abtan. At a press conference this week, he announced that the new banknotes would remove three zeroes from the denominations starting in September and anticipates this process will take a year to accomplish.
“The process of removing zeros from the currency will contribute to dealing better with inflation, facilitate economic cooperation with international banks and reduce the differences in [standards of] living in society,” Abtan explained.
The redenomination process doesn’t come without its critics. Some members of the Iraqi government warned that deleting the zeroes could have a negative impact on financial trade in the stock markets.
However, Mahma Khalil, another member of the Iraqi Parliament, said the that move would help the country’s economy.
“The objective behind this move is to appreciate the value of the Iraqi dinar against the U.S. dollar, which would in turn increase the balance of the Iraqi dinar and there would be sufficient reserves of that currency,” he said.
Old banknotes will circulate with the new series for a period of one year until so the outdated series can be effectively removed from circulation.
The process must be gradual, said Khalil.
“According to the agreements, the new bill will be printed by a European company and introduced to the market gradually and in a well-planned schedule to ensure it will not result in shocks and would not have a negative impact on the market,” Khalil explained to The Kurdish Globe, adding the exchange rate between the new banknotes and the old ones would be 1:1,000.
The new notes, however, will be printed in Arabic, English and Kurdish. To date, no details about upgraded security features for the new series have been released.