But local economists don't believe there is any direct correlation between the higher bank notes and the decrease in value of smaller bank notes. But they believe it will happen anyway because of what they describe as the “moody behaviour” of the Iraqi market and the Iraqi consumers – in other words, an interesting case of behavioural economics.
“The Iraqi market doesn't follow the same models as other countries,” argues local economist, Bassem Jamil Antoine. “The aim behind issuing higher denomination bank notes is partially to decrease the size of money being transacted, especially in corporate and business areas.”
“And in the market there is a mood that sees consumers wanting to undermine the value of smaller banknotes when larger ones are introduced,” Antoine suggests. “It's hard to explain why.”
Antoine believes the best thing to do would be to continue to issue smaller value bank notes at the same time. If small bank notes are still around, cheap goods can remain that way and low earners won't be so badly affected.
Can you tell me then as to what will happen with the older currency? Can an outsider exchange the currency he holds to the new currency and, if so, how?
Is the WARKA bank still functional?
Please advise.