The process of scrapping old dinars and deleting zeros from Iraq’s currency to replace it with more manageable numbers could cost the country billions, according to Ahmed Faizullah, the deputy chairman of the Parliamentary Finance Committee.
Redenominating is up to Iraq’s central bank, but it would cause chaos for government by redenominating after it has set an annual budget in the existing denomination. That’s why no redenomination will take place in 2013 and maybe 2014 as well.
Removing zeroes makes it easier print money, read it and add it up, and reduces the need to cart around too many notes to pay for goods and services in a country that relies almost wholly on cash. Iraq puts just 1% of all its transactions on credit card.
Although cutting zeros adds to costs and confusion, Faizullah says: “It is basically the process of currency switching and common people will take some time to get used to it. That is all.”
As Fabil Nabi, Iraq’s deputy finance minister, helpfully confirmed for some confused, amateur currency investors, “eliminating zeros from Iraq’s currency will not increase the value of Iraqi dinars.”
Read more on the dinar redenomination: