Iraq Central Bank starts to reconstruct its currency before delete the zeros project
As of today, there is not a single person inside the country of Iraq that has not heard the announcement from the Central Bank of Iraq (CBI). On Sunday, March 1, 2015, the CBI announced that the 50 Iraqi dinar banknotes would no longer be used in Iraq.
In October 2003, the Central Bank printed the new Iraqi dinar currency. It is reported that the Central Bank printed 4.3 trillion Iraqi dinar banknotes and distributed them from October 15, 2003 to January 15, 2004. We know that they printed 4.3 trillion by reviewing the U.S. government document dated December 15, 2003 to the United States Congress. You can review the YouTube video where I previously documented this.
The delete the zeros project is a mechanism that does two things. I have on numerous occasions reported to you that this is the printing of new Iraqi dinar currency. Before the Central Bank can print the new currency they have to reorganize the current banknotes already in circulation. They have begun restructuring the Iraqi dinar currency by removing the fifty-dinar banknote. This is just the beginning. Stay tuned, more banknotes will be removed as the Central Bank continues to adjust and create current categories and introduce new currencies like the 50k and 100k banknotes.
The banking industry in Iraq has refused to accept the fifty dinar notes. It was never a popular banknote, with a value of .04 cents on the dollar. This particular bank note really made it difficult to conduct business transactions. Note that, the removing of the fifty banknote will not have any impact on the money supply. If you review the Central Bank documents, they printed approximately one trillion of the 50 dinar banknotes. A small amount compared to the 68 trillion in circulation. The current Central Bank reports outlined how the money supply has increased in January 2015 by 4 trillion dinars. Sources in Iraq are saying that there were not a lot of Iraqi’s exchanging the fifty dinar notes due to the fact that they just do not use them. In fact, most of them had already exchanged them way before the Central Bank announcement.
The 250 category banknote is used in Iraq for business transactions. The 250 banknotes is another one that is not widely used. Be on alert that, in the future, the 250 category may be removed when the Central Bank continues with its restructuring of the currency. Just a heads up so that many of you can plan ahead and be prepared.
In a recent article published in Baghdad, the Central Bank announced that it had the green light to start the delete the zeros. The delete the zeros project or the printing of new Iraqi dinar currency has not started and will not start until the green light is given by the Government. The Central Bank has to have authorization from the Iraqi parliament to print the new categories of the Iraqi dinar currency. As of now, the Central bank is continuing with the restructuring of the categories as well as the daily auctions.
Recently, the Central Bank stopped the currency auctions because it was decreasing the foreign currency reserves. We know this because Hoshyar Zebari, Iraq Minister of Finance stated on February 27, “Iraqi Central Bank’s reserves of hard currency (USD) fell to $68 billion which decreased 12.5% or $9.7 billion. The Central Bank wanted to put a stop to the currency smuggling that was happening in the daily currency auctions. On Sunday, March 8, the Central Bank will start the currency auctions with money orders instead of just handing out the hard currency or US dollars to the banks and currency exchange stores. The money orders issued by the Central Bank in the auctions is meant to serve as a record of who exactly is receiving the money. Hopefully, this will deter the money laundering and smuggling operations within Iraq.
This year, the Central Bank has two goals. Both were initially reported in the media in 2004. First one being, the deletion of the zeros and the second, restructuring the category of the banknotes. You will see the Central Bank remove banknotes from circulation with a window for execution. More than likely, they will once again, follow a 60 day window of exchange, just like they did for the fifty dinar banknotes. You will also see new categories being introduced like the 50k and the 100k banknotes. The Central Bank will definitely be restructuring their current banknote categories like the 250, 500, 1000, 10,000, 25,000.
The Central Bank will also attempt to strengthen the economy by lending to the Iraqi banks. This is not going to be immediate thing though. The Iraqi banks still do not have the infrastructure for banking communications. The Central Bank will also have to go back to cash transactions to prop up the economy. In the meantime, the Central Bank is still working out the details in creating these loans to the Iraqi banks.
In 2014, the Central Bank of Iraq pushed $49 billion US dollars through the currency auctions. The auctions were funding Iraq’s enemies and not benefiting the Iraqi people in improving their lives. In Baghdad, over 400 construction projects were stopped because of the lack of funds to keep the projects going. The lack of a 2014 budget has stopped many projects in the country. We can only hope that the Iraqi government gets the funding from external sources to complete the construction projects and get the Iraqi people back to work.
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