Dr. Sinan al-Shabibi
The Central Bank of Iraq (CBI) governor, Dr. Sinan al-Shabibi has conducted an interview. Dr. al-Shabibi stated in his interview that project to delete the three zero’s (which is all code for the new Iraq currency) will be introduced to absorb inflation and focus on reducing the money supply.
I would like to mention an important fact that has never been mentioned. The fact is that when you delete the three zero’s (introduce new currency) you will be increasing the money supply not reducing it. The CBI is desperate attempting to keep a lid on this fact. The CBI will eventually reduce the money supply after all denominations are introduced in the future. This timeline has not been revealed by the CBI or the government of Iraq. Dr. al-Shabibi stated that a total of six or seven new denominations of the Iraq currency would be available. Dr. al-Shabibi reconfirmed earlier statements that the Iraq government still needs to get approval for the project of the new Iraq currency through legislation. There has been no impact on the Iraq economy from the series of media reports of the counterfeit Iraq currency. Time will tell what effects the counterfeit currency will have especially with the current sanctions on Iran. Iran may find themselves possibly cut off from the SWIFT banking transactions.
This is the source for this blog post.
I don’t think that’s true. Introducing the new currency will not increase the money supply even temporarily.
It is the opposite actually. Once the redenomination starts the Gov will start paying salaries and all expenditures in the new lower denominated currency. So if the Gov is currently putting 5 trillion dinar a month out (not an actual figure, just an example) as soon as the redenomination is enacted they will only be putting out 5 billion dinar a month. An instant reduction. The high denomination bills that banks currently have will be turned in to the CBI for new lower denoms. If a bank has ½ a trillion dinar in deposits, that will almost immediately be turned in to ½ a billion new lower denom dinar. Another almost instant reduction.
It will obviously take longer to get the dinar off the streets, but there will be no increase, because the only way to get the new dinar will be to turn in 1000 old dinar for 1 new dinar.
There is no evidence the CBI has started to remove any Iraq dinar currency from circulation ever. The Iraq dinar currency of 2003 will co-exist right along with the new 2013 Iraq currency. We have yet to be advised about the exchange of the old currency to the new currency. If you have any articles about this please send them if you don’t mind. DaveD thanks for your comments.
I didn’t mean to imply that they had removed dinar from circulation.
I agree that they have not reduced currency in circulation. They have removed some through the auctions, but that money is put right back into circulation through Gov spending. So the net amount has continued to grow.
Yes, the two currencies will coexist for a time period. But the only way the new currency gets into circulation is if it is exchanged for old currency at a rate of 1000:1. The only exception being new Gov spending. So there’s no temporary increase.
My understanding was that although the zero’s would be removed, the amount would remain the same.
That would mean that 1,000 IQD (pre-redenomination) and 1 dinar (post-redenomination) would both be worth the same amount in US Dollars.
If this is true, there would be no “reductions,” the actual bills would just look different.
I believe it will be the same, if you have a 1,000 note it will look like a $1 but still means $1,000 usd, and I am only going by the articles that I’m sure we have all read by CBI and others!
If that is true that 1 dinar is same value as 1,000 and they come out saying that 1,000 is 3.22 USD then I think it would be 1 would be 3.22 as well. So no windfall profits.
I hope I made that clear
1 dinar=1,000 dinar= 3.22
There is a reduction in the money supply. The value of the money supply remains the same.
There are currently about 30 trillion dinar in circulation, worth about 30 billion dollars.
They will be replaced by about 30 billion new dinar, worth the same about 30 billion dollars.