Three of the top US banks, including J.P. Morgan, Citigroup and Bank of America, have set their eyes on the lucrative banking business in Iraq, according to a recent report in The Wall Street Journal. These banks and several others have conferred with Treasury Department officials in recent weeks. They are said to be interested in helping the Iraqis build a modern retail banking system as well as with trade finance, payments systems and foreign currency exchange. Meanwhile, at the doorsteps of Rafidain and Rashid banks all over Baghdad, exhausted Iraqis form long queues in the heat in the vain hope of getting hold of cash denominated in the "scarce" ID 250 bill note that carries the picture of none other then Saddam Hussain. Despite Central Bank proclamations to the contrary, the ID 250 bill now trades at 33 percent higher value then its big sister, the ID10,000 bill.The latter bill note, which was put in circulation by the Central Bank of Iraq in 2002, is said to have been stolen in large quantities by happy robbers in the wake of Iraq's "liberation" by the allied forces. The ID 10,000 bill is worth about US $5. Large amounts of this bill with issue numbers starting with two are said to have been stolen from the mints of the central bank before being officially put into circulation. Traders, shop minders, ordinary people and even state-owned petrol stations continue to refuse the ID10,000 as means of payment. The banks on the other hand, short of ID 250 bills, insist on only honoring cash withdrawals with ID10,000 bill notes. Those lucky civil servants to be paid by the Americans also received their salaries in these unwanted bills. In effect, they are being paid 33 percent less then the face value of their wages. Persons with access to a steady supply of ID250 bills are happily and effortlessly making a nice 33 percent profit on their mysterious source of steady supply. This makes the ID 250 even more scarce and more in demand.
Up to March 19, the government of Iraq controlled all financial transactions. The Central Bank of Iraq acted for the government in issuing and managing currency, establishing banking controls and disposing of foreign currency. With no Iraqi government in place, transitional or otherwise, it is reported that an American 'Minister', Jeff Jacoff now handles top decisions at the Central Bank. George Mullinax, also an American, advises him. The ex-governor of the Central Bank, Usam Mullha Hawish has simply become part of the oblivion of the past, but some old figures like Hajji Falih, a respectable technocrat at the Bank, can still be found around. Whoever is in charge at the Central Bank has tough decisions to make. Besides the American dollar and bills depicting Saddam Hussain, old Swiss-printed notes in ID 5 and ID 10 denominations are also circulating, especially in the north of the country.
They are worth ID 8000 to ID 1000 of the Saddam Hussain currency. To resolve this bewildering mess requires some ingenious solution. When and how to dispense with Saddam's currency remains a question of speculation.
Foreign exchange currency dealings have become more hazardous and expensive then before. "Light trade" is the preoccupation of small makeshift money dealers now found literally at every major corner in town. They exchange small amounts of foreign currency up to several hundred American dollars. Their casual customer is a potential victim of theft and fraud using counterfeit Iraqi currency. They invariably charge upwards of 3 percent in commission.
"Heavy trade" is conducted in the alleys of Kifah Street downtown, where hundreds of thousands of dollars exchange hands daily. The forces of supply and demand in this market determine a fragile national dollar exchange rate. The forces of organized crime with arms used at free will also have their indirect influence on the dollar rate.
The Central Bank of Iraq, as always, remains a missing player. The role of the banks in trade finance is still null. Likewise is their role in cross-border transfers. The dollar is being exchanged at the time of writing at ID 1500 using ID 250 bills and at ID 2000 using the ID 10,000 bill. The exchange rate is very volatile, from ID 2500 just before the war, down to ID 1000 several weeks back, then up to ID 1650 a few days back. Traders are now speculating on the next round of government payroll. The dollar value of local currency will go up or down depending on whether salaries are paid in dollars or dinars. Demand for dollars, however, is steadily increasing as more and more imports find their way into de-facto free trade Iraq. Dollar earnings from oil exports have yet to find their steady way into the market. The state-owned banks, Rafidain and Rashid, as before, do not sell any foreign exchange to the public. Many businessmen continue to complain that sharp fluctuation in the dollar rate is hurting their business. Stabilization of the Iraqi currency is another thorny item in the agenda of the Central Bank.
Banking controls are still coming out of the Central Bank, including some peculiar ones. According to some reports, the retail banks have instructions from the Central Bank to stop all overdraft facilities to their customers. They are urging their customers to pay up their red accounts. Customers, who balance their accounts now, will nevertheless lose the overdraft facility. Many businessmen say that this provides them with little incentive to do so at a time when they are in dire need for working cash capital. Interest structure remains at the Central Bank rate, which is pegged at a staggering 17 percent per annum. Debtors who want to escape this crippling interest on their overdraft accounts can only do so if they are prepared to loose their overdraft facilities.
Internal trade has also been severely hampered by the failure of the Central Bank to reactivate its interbank reconciliation system. Banks are still refusing to honor checks issued against accounts in other banks. Whatever little confidence may remain in the banking system is quickly being eroded in favour of a cash economy.
Published date: 24/6/2003 Author: Hussain Kubba (Bulletin Economics Editor)
New currency Dealers defy Central Bank on exchange rates By Sarmad S. Ali
BAGHDAD- Moneychangers and major bourse traders, known as "Big heads", say they will refuse to comply with the Iraqi Central Bank's plan to set the dinar-dollar exchange rate. The traders' challenge to the central bank may come as a blow to the Central Bank's plans to take control of Iraq's money supply.
On October 4, Ahmed Salman, deputy governor of the Central Bank, declared there will be three weekly auctions for setting exchange rates and that these rates are expected to apply to the dealers at the money markets.
The Bank's "Foreign Currency Auction" policy aims at setting a unified exchange rate throughout the country, giving the Bank a central role in the nation's economy. The move is part of the overall plan to build confidence in Iraq's currency, which will be swapped on October 15.
Dealers question the Bank's ability to maintain control over exchange rates and are against the idea that the Bank should take control of the foreign currency market itself. They point out that the Central Bank appears to not have taken into account the strength of the dollar against the dinar, as people continue put their money in the greenback rather than the dinar. Besides, say traders, the auctions have already run into problems (see page 9).
"I don't think that the Central Bank will have full control over the traders of the bourse because the dinar-dollar exchange rate is a matter of demand. If there is a rise in the country's imports, then the dollar will soar; but if imports shrink, it will face a decline," said Ali Hawaishawi,a chief trader at the Kifah street market, Baghdad's main bourse. "This, has so far been the policy of the market," he added.
The dinar-dollar exchange rate has long been a bone of contention between the "Big heads" at Kifah, who set the rate for the majority of Iraq's markets, and the Central Bank. During Saddam's rule the Bank was continuously fighting with currency traders to set "impossible" foreign currency exchange rates, with little success. For example, the Iraqi dinar witnessed a dramatic drop in its value against the US dollar during the war. On one occasion it fell to more than ID4000 to the dollar. At that point, the exchange rate was greatly fluctuating. Meanwhile, the Central Bank of Iraq was buying and selling dollars at a worse rate than the markets were, effectively handing over control to the dealers.
The news that dealers still have no intention of complying with Central Bank demands will come as a disappointment to consumers, the traditional losers in the battle. Consumers have long been duped by traders and have been liable to their tricks and their expert manipulation of the rates of exchange. Traders were able to to buy ID10000 notes at discounts of up to 40% in recent months, based mainly on a campaign of rumors and lies. Traders have long played on the belief that ordinary dinar notes could easily be forged and "Big heads" often circulated rumors that large quantities of counterfeits had swamped the markets.
After the war, market manipulation phenomenon became so prevalent that no denomination escaped the devaluation process. It has recently spread to small denominations of US dollars. As October 15 drew nearer, the dealers took the opportunity to take profits, and now the ID10000 is only trading at a ID500 discount. Traders repeatedly claimed that these bills had already been looted from banks in the wake of war. No sooner had the ID10000 witnessed a revaluation, than traders found the newer, smaller ID250 as an alternative through which they could make a fortune. The note has been devalued and rejected in the markets and among dealers due to rumors they allegedly spread themselves. In fact, the big bourses, like Kifah, now behave like cartels that aim to regulate and manipulate monetary policy to serve their own interests.
Dealers at Kifah, Harthiya and Khadimiya, the main foreign exchanges in Baghdad, have highlighted their dismay at the Central Bank attempt to apply a steady unified exchange rate. "Even if the Central Bank has started setting the exchange rate, it will not be able to generalize this rate all over the currency markets or force the traders here to comply with its own policy," insisted Hameed Raad, a moneychanger at Khadimiya.
Raad may well be correct. Dealers who are practiced in preserving their profits represent a tough obstacle to the Central Bank's plans. Certainly, the moneychangers have become much more adroit at spurring people on to the currency markets than any economists have?
Bremer upbeat over Iraq funds
Wednesday 22 October 2003, 19:48 Makka Time, 16:48 GMT
Bremer says the US aid package to Iraq should be a full grant
US administrator of Iraq, Paul Bremer, is optimistic that billions of dollars will be raised for the war-torn and now occupied country, at the international donors' conference in Madrid.
Speaking on the eve of his departure for Spain, Bremer said he thought a number of countries will make important contributions to benefit Iraq's shattered infrastructure.
"We're finding a lot of receptivity. This is my impression. We had three Iraqi delegations travelling around the world: one in Europe, one in the region and one in Asia, and they all came back rather enthusiastic.
Bremer added that “I think we'll find the international financial institutions will come forward, with pretty good contributions. The Japanese are already at $1.5 billion", he said.
France criticised
Bremer turned his attention particularly to France, which strongly opposed the war and has since, together with Germany and Russia, given a cold shoulder to the Madrid conference and its ambition of raising up to 36 billion dollars for Iraq's basic services, ranging from electricity to schools and hospitals.
"There is a role for France and other great countries to play here"
Paul Bremer, US administrator of Iraq
"I think it would be a sad thing if the French government could not find a way to participate in the reconstruction," said Bremer.
"I think it's time for them to get beyond all of these discussions that took place back in February and March. It's time for them to recognise that we're going to reconstruct Iraq. There is a role for France and other great countries to play here."
US aid
Bremer also said the battle was not finished to convince the US Congress to pass its $20.3 billion Iraqi civilian reconstruction package as a full grant instead of demanding half of it eventually be paid back.
"I think we're going to make a big effort to make it grants," Bremer said.
Bremer says there is a role for countries to play in repairing damaged infrastructure
Bremer said once the US package received final approval, it would still take till next March before the money started to make a difference in Iraq.
"I would think by the end of the first quarter of 2004 we should begin to see activity based on the spending. Some projects will go more quickly than others. The main thrust of that money will take a few months to arrive and have an impact," he said.
Conference crucial
Bremer hammered home the dire state of Iraq's essential services that have made the Madrid conference crucial to the country's drive to build a better future after years under the rule of Saddam Hussein.
"I think the most difficult thing for us has been to try to quickly repair this devastated infrastructure in this country," Bremer said.
"I was not prepared for the amount of damage that had been done..."
"I was not prepared for the amount of damage that had been done - not by the war in fact I was surprised by how little damage had been done by the war - but by how much damage has been done over the last 35 years to the power system, the water system, the oil fields, the textile factories, the cement factories. I just don't where all the money he (Saddam) had went."
The two-day Madrid conference, which starts on Thursday and is expected to draw 58 countries and 19 international organisations, aims to help meet the $36 billion sum for 2004-2007 proposed in a UN-World Bank report.
So far, Japan has pledged $1.5 billion for next year, but the US requests for aid have been met with an icy response from France, Germany and Russia.
AFP
This man is the CPA's chief monetary strategist on loan from MSU.
EAST LANSING -- Rebuilding an economy ravaged by war and dictatorship isn't about remembering to wear your flak jacket and worrying when the next bomb might explode.
For Michigan State University President M. Peter McPherson, back on campus after a five-month tour as the Bush administration's first director of economic policy for the Coalition Provisional Authority in Iraq, it was about getting cash into the hands of ordinary Iraqis and bringing some order to economic chaos.
First, pay 1.3 million government employees. Then dole out payments to 1 million retirees. Reopen banks. Establish a central bank independent of the Ministry of Finance. Cut government subsidies to state-owned companies, but not too deeply or too quickly, lest more average citizens get pushed into unemployment.
"The whole system was brutal," McPherson told me in his first one-on-one interview since returning from Baghdad. "They had an economic structure that was irrational and extremely intrusive. There was almost nothing the state didn't produce. Under Saddam there were very intricate controls."
It was Stalinism in the Middle East. Government companies traded with each other and provided jobs, but squelched competition and growth. The Saddam Dinar, held by roughly 85 percent of the population, existed in just two denominations -- 250-dinar and 10,000-dinar bills, worth 25 cents and $10, respectively.
The national debt totaled some $100 billion for a country whose gross domestic product, excluding oil revenues, is about $5 billion.
"Right after the war, everything was shut down," said McPherson, back in his office, an unlit, slightly chewed cigar in his hand. "The power was down. The railroad wasn't functioning. The banks weren't open. The communications system for the country was not functioning.
"The war had done some damage, but by far the most damage (was done by) the looting that occurred afterward."
Trying to sort all this out is how McPherson, this week celebrating his 10-year anniversary as president of MSU, spent part of his spring semester and all of his summer. Judging by the energy he exudes talking about it all, it's obvious this apostle for internationalizing the university he leads loved every minute of it.
New challenge
McPherson is not a typical college president. He's what university types call a "business guy," more interested in tackling problems and applying management principles to higher education than publishing a paper few outside academia are likely to read.
He was a Peace Corps volunteer in the 1960s and later administrator for the Agency for International Development. He was a special assistant to President Gerald Ford, a deputy secretary of the Treasury Department and an executive vice president at Bank of America, where he honed his understanding of debt restructuring and currency in developing markets.
Laying the foundation for a new Iraqi economy rooted in free market principles, democracy and the rule of law was his latest challenge, one melding experience in developing countries with his years in banking and the Treasury Department.
"We simply had to get money in people's hands," McPherson said. "We bought the wheat and barley crop from farmers at over $100 million. We had to get cash into the economy to get rudimentary activity."
That meant identifying, with Iraqi help, the government employees who should be paid, the first time in late May. It required the help of American forces to transport cash around the country because electronic transfers were impossible, checks were non-existent and timeliness was necessary to reassure anxious Iraqis.
"We're now caught up," he said, explaining that the controversial decision to use old bills bearing Saddam's picture was intended to signal confidence in the currency. "That process ... became the overwhelming job. When we started to pay salaries, retail operations began, too."
On July 7, McPherson and his team announced creation of the New Iraqi Dinar, which will resemble the Swiss dinar that circulated in northern Iraq. Starting Oct. 15, Iraqis have until Jan. 15 to exchange their old bills for new ones. Then old dinars become souvenirs, much like German marks and French francs after the birth of the euro.
There's a new national budget, a state secret under Saddam. Import tariffs are lifted, effectively cutting prices on foreign goods. And the central bank will be independent of the Ministry of Finance, symbolizing institutional separation between Iraq's currency and the national government, whoever may lead it.
Takes time
McPherson is a realist. He'd be among the first to concede that the job of rebuilding Iraq is far from complete. But the Iraq he sees described in recent media accounts, a place of chaos, killing and dislocation overshadowing any kind of normalcy, isn't the Iraq he left less than two weeks ago.
Such sentiment is understandable for a Bush appointee, yet it's gaining credence as more Iraqi veterans return for reassessments and first-ever opinion polls of Iraqis tell a more balanced story.
"We aren't simply getting the full picture," McPherson said. "Yes, there is a security problem. But Iraqis go about their daily lives. In a few days, the schools will reopen. All the hospitals and clinics in Baghdad are open.
"Yes, it's a spotty delivery system. You can say the glass is two-thirds full, but it's two-thirds full. It takes some time. But during that time it isn't that nothing is happening."
Banks are starting to function as banks do in the United States and Western Europe. By mid-month, 80 branches across Iraq will be capable of managing transactions over a satellite e-mail system. Some will be issuing loans as large as $50,000 to businesses and consumers.
Six foreign banks can establish a presence in Iraq through acquisitions, and foreign companies will be allowed 100 percent ownership of their operations in Iraq, except in natural resources (such as oil). Maximum tax rates on individual and corporate incomes will be 15 percent.
And, no, McPherson counseled, don't make the additional $20.3 billion earmarked by the Bush administration for rebuilding Iraq a loan, as some in Congress have suggested.
"The world knows that when people have gone through something like this you don't make money on it," he said. "You build and you reach out."
Daniel Howes's column appears Sundays, Wednesdays and Fridays. He can be reached at (313) 222-2106 or at dchowes@detnews.com.
Cashing In: Iraqis Get New Currency Revamped Dinars Seen as Crucial for Economy
By Ariana Eunjung Cha Washington Post Staff Writer Thursday, October 16, 2003; Page A14
BAGHDAD, Oct. 15 -- Iraqis toting grocery bags, shoeboxes and backpacks stuffed with cash flocked to banks Wednesday to trade in bills with former president Saddam Hussein's face for new ones in a currency swap that is the cornerstone of the interim government's plans to rebuild the country's economy.
The old currency will be valid for another three months. But by late afternoon about $670 million worth of dinars -- an estimated one-third of the cash believed to be in the country -- already had been turned in to banks, according to officials from the U.S.-led occupation authority. In a one-to-one exchange, Iraqis received freshly printed bank notes -- with pictures of a farmer holding wheat, a 10th-century astronomer and mathematician, the city of Babylon and date palms -- in six denominations ranging from 50 dinars to 25,000 dinars.
For the past few weeks, unmarked 747s have been flying about 2,200 tons of new currency into Baghdad International Airport. The brown crates of cash were loaded by forklift onto trucks, which were escorted by military helicopters and Humvees to 250 local exchange centers.
An estimated 4 trillion dinars are in circulation, but the occupation authority printed 6 trillion dinars, or roughly $3 billion, so there would be some left over to later replace worn bills, according to retired Brig. Gen. Hugh Banks Tant III, director of the Iraq currency exchange project. One U.S. dollar could be exchanged for 2,000 dinars.
The occupation authority says it hopes to make Iraq's financial system -- until recently one of the most secretive and most controlled in the world -- into a showcase for capitalist ideals. L. Paul Bremer, the civil administrator of Iraq, said he believes that introducing a new dinar note will stabilize the value of the currency, which in turn will encourage savings, investment and entrepreneurship and help create what many Iraqis today want most: jobs.
"We are laying the groundwork for a free economy to blossom," Bremer said on a tour of the main distribution warehouse at the airport that houses the new bills, which cost $120 million to print and $50 million to distribute.
He asserted that "economic security comes hand in hand with national security" and that when more people are put to work, the ambushes, shootings and other attacks that have plagued the country over the past few months will decrease.
More than a few Iraqis argued that the currency exchange was premature given that bombs were still going off in the streets and that a significant part of the country remained without reliable electricity and running water.
"Why do they spend so much money to change the currency? This country needs so many things other than changing the currency," said Najam Hadaithy, 54, a retired pilot, while waiting in line at a Rafidain Bank branch in the southern part of the capital.
Barra Faraj, 40, a bank analyst, said that she seems to be paying more for everything because many people, including her landlord, want payment in dollars. She wondered if it would get worse with another new currency.
But even those most skeptical of the currency exchange acknowledged that it would have had to be done eventually.
The currency is so inflated that people use bags, not wallets, to carry cash. It takes so much time for shop owners to count out the money required to pay for some things that many opt to weigh the bills or use counting machines. Only two denominations of the Saddam dinar were in circulation: the 250-dinar bill and the 10,000-dinar bill.
"It's like us using only a 12-cent piece and a five-dollar bill for all transactions," said Thomas Simpson, an economist for the U.S. Treasury Department's Iraq Financial Task Force.
Under Hussein, the exchange rate was fixed at 3.2189 dinars to the dollar. After the war, it began to fluctuate wildly, falling at one point to a low of 4,000 dinars to the dollar. There also were rumors that the 10,000-dinar bill would be put out of circulation because of counterfeiting and looting. People got so worried that they were selling their 10,000-dinar bills to currency traders for 7,000 dinars' worth of 250-dinar bills.
Occupation authority officials say a stable currency is necessary to help operators of the public food distribution depots open their own stores, introduce micro-lending in rural communities and modernize the Baghdad stock market. The U.S. Agency for International Development recently awarded a contract worth up to $40 million over three years to McLean-based consulting firm BearingPoint Inc. to provide support for introducing capitalism into the country.
But that outcome isn't guaranteed. Some argue that the new currency is as likely to further destabilize the economy as jump-start it, especially because so little is known about how Iraq's economy operated during its decade-long isolation.
Some money traders are already beginning to violate the Iraqi Central Bank's foreign exchange rate, set by thrice-weekly auctions. There's also a worry that the new bills will only exacerbate public confusion over the worth of goods, which has led to inflation in the cost of some necessities such as oil.
Occupation officials said the swap was necessary to create uniformity and to stabilize the foreign exchange rate of the dinar. The new bills also have watermarks and other features to make them hard to copy and quell worries of counterfeiting.
Under normal circumstances, it takes about two years to phase out an old currency. The U.S.-led occupation is trying to do it in a fraction of the time. It paid for expedited processing by De La Rue, one of the world's premier bank note printers, which used presses in Britain, Germany, Spain, Malta and Sri Lanka.
To prevent the old dinars from being stolen and re-exchanged, they are being dipped in red ink at the bank branches where they are turned in and are then shipped to the airport, where they eventually will be burned.
Iraqi banks have started issuing new currency without Saddam's image to replace old Iraqi dinars.
People lined up outside banks, protected by US tanks and other armoured vehicles, to receive the new notes in exchange for the old bills that carried the grinning picture of Saddam Hussein.
"This operation will help the dinar, which today goes for 2010 to the dollar. We believe it will go down to 1700," Chamas Sabri, a director of the Warka investment bank said.
The new notes are in the denominations of 50, 250, 1000, 5000, 10,000 and 25,000.
The US-led occupation administration hopes the operation will help restore the credibility of the Iraqi dinar which was over-printed and easily counterfeited in the earlier era.
Modern notes
The new banknotes, printed in Britain, boast of the most up-to-date anti-counterfeit features, including watermarks, a security thread, raised letters, an optical variable ink and other variations to thwart counterfeiters.
US-occupation administrator Paul Bremer had announced in July that new banknotes would replace the locally-printed dinar in use after the UN slapped sanctions on Iraq for invading Kuwait in 1990.
This operation will help the dinar, which today goes for 2010 to the dollar. We believe it will go down to 1700"
Chamas Sabri, Director, Warka investment bank
Banking officials hope the new dinar will contribute to the stabilization of market prices and bring about a single exchange rate against foreign currencies.
The new money has roughly the same value as the current banknotes – about 2000 dinars to the dollar.
Iraqis who hold old dinars but live abroad will have to return to the country to trade them in.
Iraqis will have until 15 January to exchange their old bills for the new ones.
The logistics of introducing the currency have been enormous.
Large planes have been flying into Baghdad from London several times a week for the last fortnight transporting the new notes, followed by small plane deliveries to Mosul in the north and Basra in the south.
Commerce Chief Says Iraq Violence Should Not Discourage Investors
By ALEX BERENSON and EDMUND L. ANDREWS Published: October 16, 2003
AGHDAD, Iraq, Oct. 15 — At a heavily guarded warehouse at the Baghdad airport, which ordinary Iraqis cannot enter without American permission, Commerce Secretary Donald L. Evans said on Wednesday that violence in Iraq is isolated and that foreign investors should seize opportunities here.
Mr. Evans, who has spent two days in Iraq, spoke at a news event to introduce the new Iraqi dinar. The United States has touted the replacement notes as an important step toward ending the legacy of Saddam Hussein, since Mr. Hussein's dour face decorated Iraq's old bills.
Referring to the violence, Mr. Evans said, "You have to look beyond these isolated incidents that are occurring." Asked what advice he would give potential investors, he said, "Tell 'em to come here like I did."
In the last week, three suicide car bombs have exploded in Baghdad, killing 15 Iraqis. Nine American soldiers have died in Iraq from accidents and attacks. Such incidents have deterred foreign investors, whose activity here up to now has been meager.
Still, the introduction of the replacement currency appears to be proceeding smoothly. On the streets of Baghdad, the new bills aroused great interest from both ordinary Iraqis and professional money-changers.
"We are very happy because this is a real currency," said Salam al-Taei, an employee in the Ministry of Electricity. "It will stop crime because no one will be able to forge these notes, and it gives a sense of stability to everyday life."
Haqi Hussein, a money-changer outside the Palestine Hotel, said that many people wanted the new bills. He said he worried that because the notes are more difficult to counterfeit than the old dinar, their value would not fluctuate much, cutting into his profits. "If the exchange rate is too stable, we can't go on and work," he said.
The introduction of the new bills has cost $51 million and required six months of preparation and an airlift of almost six million pounds of dinars into Iraq on Boeing 747's.
The project has been a priority for American administrators. The old notes contain a portrait of Mr. Hussein, reminding Iraqis that he remains at large each time money changes hands.
In the next three months, Iraqis will be allowed to trade their old dinars for the new notes on a one-for-one basis. After that, the old bills will become worthless.
A different currency, the so-called Swiss dinar, circulates in northern Iraq, and that will be exchanged on at the rate of one Swiss dinar for 150 new dinars.
The new dinars come in a range of denominations, from 50 dinars, worth about 2.5 cents at Iraq's exchange rate of 2,000 dinars to the dollar, to 25,000 dinars. The old bills came in two denominations, 250 dinars and 10,000 dinars, making small transactions a hassle. The new bills also include several anti-counterfeiting measures.
The bills are made by De La Roue, the British company that made the old Swiss dinar, at printers as far away as Malta, Sri Lanka and Germany. They are flown in to Baghdad International Airport, then driven or flown to banks in heavily armed convoys run by Global Security, a private contractor. About 80 banks around Baghdad and about 260 nationwide will receive the notes. So far, the transport has gone smoothly, although two banks have been attacked after receiving the notes, Global said Tuesday.
Meanwhile, American military officials said that on Tuesday night, they intercepted a group of people trying to cross the Syrian border. The group opened fire with rocket-propelled grenades and assault rifles when confronted by American soldiers and Iraqi border guards, the officials said. The soldiers killed several people and detained the rest, they said. The American force did not suffer any casualties.
Raids across the Syrian border have markedly increased in recent weeks, the officials said.
In addition, investigations into the two most recent suicide car bomb attacks in Baghdad, at the Baghdad Hotel on Sunday and at the Turkish Embassy on Tuesday, revealed that the cars used in the attacks had been packed with high explosives as well as old Iraqi mortar shells, officials said.
The presence of the high explosives was significant because such bombs can be more difficult to prepare and more deadly than bombs made only from old ammunition, the officials said.
MR. SENOR: Good afternoon. I'm Dan Senor, senior adviser to Ambassador Bremer and the Coalition Provisional Authority. I'll also introduce Tony Fratto, who's with the Department of Treasury. Both of us will be available to answer any additional questions you have afterwards.
MR. SENOR: H-U-G-H. Tant, T-A-N-T. He's the director of the Iraqi Currency Exchange for the coalition. And joining General Tant are two of his advisers, Mr. Simon Gray --
Simon, raise your hand, please, so they know who -- there you are.
-- who is from the Bank of England, who is working on this with us as well.
Q Is that A-Y or E-Y, please?
MR. SENOR: Ah, A-Y.
Q Thank you.
MR. SENOR: And Mr. Jacob Nell, N-E-L-L, who, process of elimination, is the third one -- (laughter) -- from the U.K. Treasury.
As you know, today the new Iraqi dinar has been put into circulation. The three-month exchange process began today. It is a one-for-one exchange for the old dinar versus the new dinar. I'll get -- I'll let the gentlemen from Baghdad get into details about how the Kurdish currency is being transferred -- exchanged.
This is Iraq's first new -- first national currency in the last, I presume, 15-plus years. It is symbolic of a unified economy. It is currency that is much more user-friendly, many more denominations. It has much-improved anti-counterfeit measures which we believe will give the Iraqi people increased confidence in their currency. It, as I said, is one currency for the entire country, versus two regional currencies which have existed up till now. And finally, but not least importantly, Saddam's image, his face is no longer appearing on the dinar, symbolic recognition of Saddam -- that Saddam Hussein is gone, as are all the horrors that he wreaked upon his country.
The central bank has taken the lead on the exchange program. General Tant's office advises and assists the Iraqi Central Bank. And like all the reconstruction projects we do in Iraq, we've been working hand in hand with Iraqi officials.
The logistical challenge involved with this currency exchange is enormous. Something -- some $3 billion, the equivalent of $3 billion in U.S. cash has been brought in, over 25 747 aircraft flights to bring in the currency, distributed to over 250 exchange sites across the country. We've trained some 750 Iraqi personnel to work the exchange sites. The amount of cash is -- I read one number recently -- something like over 2,200 tons of bills. It's an enormous challenge. It is something that we believe is another sign that the reconstruction is on track. It is another step toward major progress. Launching a new currency is something that took, in post-World War II Germany, three years before it was launched. And here we are, just last week having celebrated the six-month anniversary since the fall of the regime, and we're launching a new currency.
And with that, I will turn it over to our gentlemen. I think General Tant is going to start off with a statement, and I'm not sure about the others. And then we'll be happy to take your questions.
GEN. TANT: My name is Hugh Tant, and I'd like to say in the Iraqi language, "as-salaam aleikum" and happy dinar day.
Good afternoon, ladies and gentlemen. I'd like to start with an opening statement that gives an overview of the Iraqi currency exchange program, and then answer any questions that you have on that topic. I'll have to rely on someone on your location to keep the questions coming in an orderly manner, but would really appreciate it if you would identify yourself and your media organization before you start your question. That will help me and my colleagues in case we have to research an answer and get back to you.
The Central Bank of Iraq has taken an important step toward securing the economic future of the new Iraq by introducing a new currency today. Iraq needs a single, stable and secure currency which is convenient to use. Iraq has been divided by two currencies, the Iraqi print dinar -- that's the one that has Saddam's face on it -- which circulates in the central and southern parts of the country; and the pre-1990 Swiss dinar, which circulates in the north. Introducing a single currency is a key step towards the integration of the two parts of the country into a single nation.
A stable currency is the underpinning of sustainable economic growth. Under Saddam, Iraq suffered from inflationary financing of the government which fueled hyperinflation. The new currency, backed by the ban on inflationary financing of the government, draws a line under the past.
A nation's currency also needs to be protected against counterfeiting. This is a widespread concern that the current print dinar, printed on cheap paper with archaic technology, is easy to counterfeit. A huge amount of effort goes into obtaining notes which are seen as more secure. For instance, from April to September, the 10,000-dinar note traded at a 25 percent discount to the 250-dinar note. The new dinar note features up-to-date security measures on high quality paper, which will make it a durable, secure currency that inspires confidence; plus the dinar is currently an inconvenient currency with too few denominations. Iraqi consumers have to make do with two basic denominations, the 250 denomination, which is worth about 10 cents in the United States, straight to the 10,000-dinar note, which is worth about five U.S. dollars. And all of this makes getting change time- consuming, and carrying money a great burden.
The new range of denominations -- 50, 250, 1,000, 5,000, 10,000 and 25,000 -- will make the new Iraqi dinar a more practical and useful currency. In addition, the bad guy's face will be removed from the country's currency and replaced with scenes that remind the world of Iraq's important scientific, cultural and historical contributions.
The current print dinars will be exchanged at a one-for-one rate with the new Iraqi dinars. This rate was reflected in an effort to make the exchange as smooth as possible and protect the Iraqi people from being confused and defrauded by unscrupulous people seeking to take advantage of the situation. The older, pre-1990 currency, known as the Swiss dinar, will be exchanged at a rate of one Swiss dinar to 150 new dinars. This exchange rate reflects the difference in buying power for an average basket of goods in the northern, Kurdish region that continued to use the Swiss dinar after 1990, and the rest of the country, which moved to the print dinar.
The exchange period will run through January the 15th, 2004. And we'll use approximately 250 sites located throughout Iraq. Most of these exchange sites are banking institutions. There will also be a mobile exchange capability for isolated areas. to take care of people like the Bedouins.
Typically, it takes a couple years from deciding to introduce a new currency to actual implementation. In Iraq, the new currency is being introduced just three months after Ambassador Bremer announced the decision on July the 7th.
The exchange is a major logistical operation involving, among the elements, printing in six countries -- Sri Lanka, Kenya, Spain, the U.K., Malta and Germany; flying the 2,200 tons of new currency in 747s into Baghdad; three distribution hubs throughout the country; a battalion of Fijian soldiers to move the new currency to the banks and pick up the old currency; a fleet of Russian aircraft to move the currency in country; over 100 convoys that have delivered over 700 tons of currency around the country to date; over 10,000 bank staff and thousands of Iraqi police and bank guards providing security; a destruction site, where the verified notes are incinerated at a rate of up to 500 50-kilo sacks a day -- that's about 25 tons per day -- an information campaign that has distributed thousand of posters, millions of handbills, and a road show that has been to every region of the country; a major training and support program, which has trained 900 Iraqi bankers and provided counting machines, generators, ultraviolet lights and information packs to support the exchange locations.
As a result of this operation and the hard work of the Central Bank, I am pleased to announce that over 230 banks opened for the exchange today. Early reports from across the country indicate the first day of the currency exchange was a great success. And it was conducted in an orderly manner, without major incidents.
Earlier today, at the Baghdad airport, Secretary Evans; Dr. Shabibi, the governor of the Central Bank of Iraq; Ambassador Bremer and I marked the start of the exchange with a tour of the Central Bank site.
The new Iraqi dinar will provide a firm foundation for Iraq's future economic development -- a single, secure and stable dinar.
Please feel free to ask me and my colleagues any questions that you have about the currency exchange. Thank you.
Q General, Charlie Aldinger with Reuters. Can you hear me?
GEN. TANT: I can hear you. Yes, sir.
Q Might we ask your full name, sir, before we start?
GEN. TANT: Yes. My full name is Hugh, H-U-G-H, Banks, B-A-N-K- S, Tant, T-A-N-T, III.
Q Sir, what's going to be done with the billions of dollars in counterfeit dinars that you've come across? They're just going to be -- I assume no exchange will be given for that. Will they just be taken up and destroyed?
GEN. TANT: Absolutely. Counterfeit is illegal in this country, just like it is in the United States and other countries. And when it is turned in at the banks, no credit will be given for that currency, and it will be destroyed.
If someone questions the banker's decision that it's counterfeit, they will be shown in different ways that it is counterfeit. They have ultraviolet lights in the banks. They also have Secret Service brochures that show what a counterfeit bill looks like under the ultraviolet light. They also have the bank manager, who can study the currency and determine that it is valid or invalid. If it's considered invalid and the customer still does not want to accept that, then they have the ability to call the Central Bank of Iraq and have someone come and attest to the validity of the currency.
Q Well, just a brief follow-up sir. Is there any indication at all how much money is in -- counterfeit money is in circulation?
GEN. TANT: Sir, before I left Washington, D.C., I spoke with the Secret Service, and they told me that approximately two notes per 1,000 was expected to be counterfeit.
Q General, this is Pam Hess with United Press International. On the counterfeit issue, just explain the philosophy behind making someone who is really an innocent victim of counterfeiting pay the price for it. See, you might have people whose whole life savings could be, theoretically, up in smoke because you all won't exchange that money. And how do you intend to deal with that problem?
And could you also explain -- is this a -- is it a voluntary exchange, or is there some point at which you're going to cut off acceptance of the Saddam notes, that people's confidence in the new notes will be such that they'll come in on their own?
GEN. TANT: Right. As I mentioned earlier, on the counterfeit side, counterfeit is illegal, and no credit will be given for it.
As far as the exchange, it's going to run from 15 October to 15 January. And we have publicized to the people, through the multimedia, that they don't have to rush to the bank; there will be plenty enough money to go around. They don't have to all show up on the first day or the second day. They have 90 days, basically, to do the currency conversion. But it has been clearly publicized that the 15th of January is the end date. And so they need to do their conversion.
Now, another alternative would be if they had -- and a lot of people took advantage of this, by the way -- that they could have money placed in their account and it would be automatically converted for them; they wouldn't even have to show up at the bank.
And so, I hope that answers your question.
Q Not quite. It's Pam Hess again. There is a tremendous private economy, especially in Baghdad; private money-changers on the street, kids selling sodas, people -- you can, for some reason, buy tissues everywhere. What's to say that people are going to change their money? Even if you stop exchanging it January 15th, what's the impetus for them to change the money? Because presumably, they'll continue -- many people will continue to use the Saddam notes, even after January 15th. What will stop them from using them?
GEN. TANT: Well, they would be using worthless money, and that wouldn't make a whole lot of sense to me. Would it to you?
Q No, sir. Money is worth what people believe it's worth. And if they continue to exchange it -- if they continue to use the Saddam notes amongst themselves, then you haven't exactly changed the money.
This isn't a criticism, I'm just wondering how you work it out so that the money actually gets changed.
GEN. TANT: Well, I have to tell you, you know, we're taking every effort to inform the people through a very aggressive campaign that has been going on for some time, through handbills, posters, the newspapers, radio announcements. And also, we are putting brochures in the food baskets, and about 95 percent of the population participate in the food basket program. And the food baskets, on 1 November, will contain these brochures as another measure to get the word out so that people can take advantage of this period of time from the 15th of October through the 15th of January to get their money exchanged.
And I would now like to turn it over to Jacob Nell, who I believe can contribute to this answer.
MR. NELL: Just to add that general experience in currency exchanges around the world is that most of the exchange takes place in the first couple of weeks. And although three months has been allowed in Afghanistan and in the euro area, most of the cash had exchanged within the first week.
And secondly, I think there is a demand for the new print dinar because of the problems -- for the new Iraqi dinar because of the problems with the print dinar. It's widely suspected of being insecure, and it's not been stable in the past. And people wanted a new currency. And we had orderly exchange taking place across the country today. And the Swiss dinar is very old and falling apart. And people want to get their hands on the new currency.
Q Gentlemen, my name is Tom Squitieri with USA Today. Jacob just touched on what I was going to ask, but I'd like to ask in a different manner. What experiences, if any, did you -- were able to use and apply based on the conversions to the euro and, more recently, to -- in Afghanistan? And in Afghanistan, as you all may know, addressing Pam's point, there were some concerns that people, even despite a very intense, widespread publicity campaign, that some people who live in the mountains and such who come into the villages once a year wouldn't get the message in time. And you mentioned, General, the Bedouins would be too mobile. So if you could give me a little more detail on that. So, what lessons did you apply, if any, from the last two conversions, and more on the Bedouins, please. Thank you.
GEN. TANT: Well, absolutely. If we receive word from any means -- and you know the military is positioned throughout the country, and we have governance throughout the country that the people go and talk to. And let's say through the Food Basket program, since 95 percent of the people participate in that program, and they read this brochure, and they're way out in the desert. And they say, well, we need to participate and exchange our dinar, then, when the word is funneled to us -- and we're very sensitive about this -- is that we will go out and meet with the leaders of those Bedouin tribes and determine a good location and a time, and then we will send the mobile exchange teams out there to serve that population, that part of the population.
MR. NELL: On Afghanistan, we looked very carefully at the lessons from that exchange. But there's a dysanalogy, really, because Iraq has a banking system. And I think Afghanistan outside Kabul, you didn't, really. And they only used 50 exchange sites in the currency exchange there. We're using about 250. However, some of the ways in which we designed the program -- dying the old notes at the banks to prevent re-circulation, some of the ways in which we designed the forms on some of the equipment that we used, was based upon experience from the Afghan currency exchange.
Q Hi, sir. This is Donna Miles (sp) from the American Forces Press Service. You said that most of the exchanges tend to take place early on in the exchange period. Do you have a sense, first day exchange, how many dinars were exchanged, how many people went to these different sites today?
GEN. TANT: Right. We don't have a tabulation on exactly how much was exchanged today. We do have reports that the exchanges were widely used by the population. And it will take some time to get those reports in to us so that we can determine exactly how much, but those reports are very important to us because we'll use that in the replenishment process when we go back to the banks and replenish their monies.
Q Paul Courson with CNN. Thanks for having the briefing.
One question is whether you've alerted any of the military tactical teams to be on the lookout for large amounts of cash that will be unearthed in the dinar denominations, where we had reports earlier that they were paying potential attackers against U.S. troops over there. Do you think -- and I'm talking about more than just shaking out the mattresses. We're talking large volumes of cash that will suddenly become unearthed as part of this exchange so that they can continue this underground funding, if you will.
GEN. TANT: Well, we've trained nearly 1,000 bankers, or over 900 bankers, and in that training there was a block of instruction for the handling of suspicious amounts of money. And also, we have recommended that any amounts of money turned in over 5 million dinar, which is equivalent of 2,500 U.S. dollars, that a report be rendered, you know, indicating the person who turned it in and their identification number and information about them personally. It is required for anybody turning in over $25 million, it's absolutely required that it's reported. Also, the banks are heavily guarded by the Iraqi police and bank guards, and if a bank manager felt somebody was doing some criminal-type transaction, then they would have the police at their immediate disposal to handle the situation.
MR. NELL: I wonder if we could add on this point that we are essentially knocking on an open door, in that first, Iraq in the old regime did have a system for reporting suspicious transactions or possibly criminal transactions, so bank managers and the police are familiar with this type of reporting. And it's pretty clear that most bank managers and bank staff are more than willing to report people who they think might be trying to launder money belonging to the previous regime.
Q General, Charlie Aldinger again with Reuters. What is this money backed by, sir? I mean, U.S. dollars are backed with gold bullion, aren't they? Is there gold in a bank somewhere supporting it? What gives it value, I guess I'm asking.
GEN. TANT: Absolutely, that's a very good question. And it's backed by international currencies and government securities, just like the U.S. currency.
And I'll ask Simon if he would like to add anything to that.
MR. GRAY: I think you've given the answer there, General Tant. The dinar, as you say, just like the U.S. dollar and the British pound and the euro, is backed by a mix of government securities, other loans to banks, foreign currencies and gold. The Central Bank of Iraq has all of those.
MR. SENOR: Anyone else?
Tony, why don't you -- are we -- anyone else?
Q I assume he's a retired general, isn't he? And what branch --
MR. SENOR: General, what rank are you?
Q What service?
MR. SENOR: Why don't you -- what service, what rank. Can you give them -- they're interested in who you are. (Laughter.)
Q I assume he's retired. I assume -- are you retired, sir?
GEN. TANT: I am retired. My last five and a half years, I served at the Pentagon and managed $44 billion of the U.S. Army's budget, and briefed the Hill and staffers approximately 120 times. And now I'm a banker at Southcoast Community Bank in Mount Pleasant, South Carolina, and that is considered one of the fastest growing businesses in South Carolina. And very proud of that. And I was very proud to be able to contribute to this operation. I'm married. I've been married almost 30 years to Kristine Lee Tant (sp), and I have twin daughters, Ann (sp) and Elizabeth (sp). Ann is a pharmaceutical sales rep in the Arlington area with GlaxoSmithKline. And my daughter Elizabeth (sp) is a West Point graduate, married to a West Point graduate. They serve their country. And now my daughter is trying to put her husband, Jeff Angerman (sp), through law school, where he's number two in his class.
MR. SENOR: Yeah, General, what rank, lieutenant general or full -- what rank are you?
Q Were you.
MR. SENOR: Were you?
GEN. TANT: I was a brigadier general. That's a one-star.
MR. SENOR: Anything else? Grandchildren, aunts, uncles -- anything? (Laughter.)
GEN. TANT: I served in the first Persian Gulf War with the 101st Airborne Division Air Assault. And I commanded the base camp where we had our 18,000 soldiers to prevent any type of attack like a Beirut- type terrorist attack.
Q Thank you.
MR. SENOR: Thank you, General.
Q Thank you very much.
MR. SENOR: Why don't you come up. And if you guys have any follow-up, Tony Fratto from Treasury I think may be able to shed some light.
Did you get your question --
MR. FRATTO: Should we let these guys go to bed?
MR. SENOR: Yeah. You guys -- and by the way, thank you for staying up so late. We recognize -- having been on the other end, I know how you feel. So thank you very much.
GEN. TANT: We thank you, too. Thank you for having us.
MR. SENOR: See you in Baghdad.
Q What's the impetus for exchanging money instead of just ignoring the money exchanged? Is it -- what is that?
MR. FRATTO: I'm sorry? The economic argument for it?
Q Yeah. If I'm Joe on the street and I just, "Oh, I like my Saddam notes, I'm going to keep these. People keep allowing me to buy cokes on the street."
MR. FRATTO: And Jacob -- I think it was Jacob who sort of answered that question. I mean, the thing about paper money is it wears out. It doesn't last forever. So a couple reasons. Number one, the whole idea behind money is that it's liquid and it's accepted in a lot of places. You can spend it. And if it's not the official currency, it's not going to be accepted in banks and other official places, its value really diminishes a great deal.
Q So the answer is, what will keep there from being now two currencies, the old and the new, is the fact that official places, like banks, will not accept the old after January 15th.
MR. FRATTO: That's right. And then fewer and fewer people will begin to accept it, also. A business, even if it's, you know, sort of an off-the -- you know, a non-official business, you know, a street vendor, even they will begin to give you less and less for that currency if it's not accepted as an official currency.
And then, you know, the U.S. dollar -- the one-dollar bill has a life of about 18 months. The Saddam dinars were printed on really inferior paper, so you can imagine that their shelf life is even less.
What was really unique was actually the Kurds in the north, who maintained that old dinar for a very long time, almost 10 years --
MR. SENOR: Without any replenishment.
MR. FRATTO: -- without any replenishment, which actually gave them a very stable monetary policy up there. They had no inflation because they only had a limited supply of money. But they all knew that, you know, so they took very good care of their money. And even then, it ended up being very flimsy. But they took care of their money because they knew that they couldn't replenish it in any way or trade it in in any way.
Q What do you think will happen to the money changers on the street? Do you think that business will go away with the new -- the ones who are changing from U.S. dollars back and forth.
MR. FRATTO: I doubt it. I mean, it should still be a fairly thriving business. I mean, the U.S. dollars will still find their way into a country like Iraq, just like they do in lots of other especially oil economies, you're going to find dollars, and even euros, as well.
Q Tony, on the exchange rate, the old dinar was worth -- a 10,000 dollar (sic) note was worth about five bucks. What's the new one worth, just to --
MR. FRATTO: The same.
Q It's worth -- and will that be floating, or somehow --
MR. FRATTO: It's -- yeah, it floats. It floats on the -- it floats on the street. There is no --
Q So in other words, if the oil comes on line, the value may go up, or if it's slow to come on, it may -- could it slip as well?
MR. FRATTO: Yeah. Just like any other floating economy, it'll depend on the, you know, the relative strength of that economy and whether the country is running a sound -- you know, running sound fiscal and monetary policy. And it was one of the great -- you can't run -- you can't run a monetary policy without knowing what the money supply is, for example. That's one of the great -- just from an economic benefit, for the first time, Iraqi -- you know, the Finance Ministry and budget officials will actually know what the money supply is, you know, so you can run an effective monetary policy now because you know what M1 and M2 is out there, you know how much money is in the economy, and you know what the impact, then, is on prices and the exchange rate, and --
Iraqis exchange old Saddam-era dinars
October 15, 2003
Baghdad - Iraqi banks on Wednesday started exchanging old Iraqi dinars for a new Saddam-less currency that rids the country of another vestige of the fallen dictator as it struggles to rebuild a war-shattered economy.
Iraqis lined up outside banks, protected by US tanks, to receive the new notes - in denominations of 50, 250, 1,000, 5,000, 10,000 and 25,000 dinars - in exchange for the old aqua and light purple bills, which featured a grinning, sartorial Saddam Hussein.
"We're really happy to get rid of Saddam. Since I spend my days counting money, I saw him all day long, and he came back at night in my nightmares," said money changer Haytham al-Okabi.
"This operation will help the dinar, which today goes for 2,010 to the dollar. We believe it will go down to 1,700," said Chamas Sabri, a director of the Warka investment bank, a few hours after financial institutions opened their doors for the swap operation expiring January 15.
Visiting US Commerce Secretary Donald Evans formally introduced the new currency at a ceremony at Baghdad airport, as "a symbol of moving toward a stronger economy."
"The former dictator's face has been removed from the currency,," he said, at the brief ceremony, also attended by the Central Bank governor Sinan Shabibi and US civil administrator Paul Bremer.
"It is a major step toward economic security," he said, in a hangar stocked with crates of new money, as he urged foreign investors, particularly Americans, to travel for business opportunities in Iraq.
Shabibi said "this is a milestone. It shows that the Iraqis are on the road to national independence, which all are Iraqis aspiring for."
"It will prevent counterfeit, unify the currency, ease transactions and probably allow us to monitor money supply," he said.
US General Hugh Tant III, who supervised the project for the coalition, said six trillion dinars had been ordered for Iraq, with four trillion of the new bills being kept in reserve.
Fourty-two percent of the total has so far been shipped to the country.
"An estimated 2.25 billion banknotes, worth four trillion dinars and weighing about 9,000 tonnes, will eventually be destroyed by the central bank," he said.
The US-backed government hopes the operation will help restore the credibility of the Iraqi dinar, which was over-printed and easily counterfeited in Saddam's era.
But not everyone was so happy.
In Saddam's hometown of Tikrit, north of Baghdad, taxi-driver Shihab Ahmed refused to accept the disappearance of the Saddam dinar.
"I will not change all the bills I own because they carry the picture of a leader from Tikrit ... They are a blessing and carried the picture of an Arab Iraqi leader," said Ahmad.
In Baquba, northeast of the capital, one person was injured when Iraqi police fired shots to disperse demonstrators marking the anniversary of a pro-Saddam referendum and protesting the new currency.
The new banknotes, printed by British company De La Rue in several countries, boast the most up-to-date anti-counterfeit features including watermarks, a security thread, raised letters, an optical variable ink and other variations to thwart swindlers.
Simon Gray, a project advisor from the Bank of England, said "the project for the new currency cost 120 million dollars for the printing and 50 million dollars for the implementation."
Bremer announced in July that the new banknotes would replace the locally printed Saddam-model dinar in use after the United Nations slapped sanctions on Baghdad for invading Kuwait in 1990.
The currency in use prior to that, known as the Swiss Dinar even though it was also printed in Britain, had remained in circulation in northern Kurdish regions that slipped out of Saddam's control following the 1991 Gulf War.
All the new notes, except for the 25,000 dinar bill, boast the same design as the old Swiss Dinars but in new vibrant colors.
With Saddam gone from the government and the currency, the new bills pay homage to Iraq's rich cultural heritage, featuring people or places from the times of ancient Mesopotamia. - Sapa-AFP
Launching the new Iraqi Dinar at Baghdad's airport Iraq, Economics, 10/16/2003
U.S. Commerce Secretary Don Evans yesterday in Baghdad considered that the new Iraqi dinar which began circulation as marking "a new phase towards a free country."
He said on the occasion of launching the Iraqi currency at Baghdad's airport that investors will "have confidence in the Iraqi economy." Commenting on removal of the photo of the Iraqi President Saddam Hussein from the new currency, Evans said "the horrible man and the leader of the terrorist regime is no longer exists. This sends a very strong message to confirm who is in authority. The Iraqis have the authority."
The new banknotes began circulating yesterday with paper notes valued at 50,000, 250,000, 10,000, 25,000 dinars. The process of replacing the old currency will last for three months until January 15, 2004.
The new currency is equal to the value of the "Saddam Dinar" which now circulate in Iraq, while the "Swiss Dinar" circulated in the Kurdish area is equal to 150 of the new dinars. A source at the central bank said that the new dinar will be exchangeable with US dollars and other international currencies at market exchange rates. Worthy mentioning that one US dollar equals 2000 Iraqi dinars.
The new currency bears scenes from the old Mesopotamia. For instance the 10,000 dinars paper carried the picture "al-Hadbaa minaret" in al-Musil mosque and on the paper of 25,000 dinars is printed the picture of the Babylonian King Hamourabi.
Yesterday, the Iraqis rushed to the banks which were put under strong American military protection to exchange their banknotes. Each bank is guarded by one US tank and five armored vehicles and 10 American soldiers.
The launch of the new Iraqi dinar today has much more than symbolic value, argues Daniel Hanna, Standard Chartered Bank economist. This is vital repart of the restoration of normality to the Iraqi economy.
Iraq gets a new currency today. The 'new Iraqi dinar' will be unveiled to the public and the mammoth task of exchanging an estimated 4 trillion in old dinar notes will begin. Saddam Hussein's face, which was on most of the old notes, will be replaced by pictures of an ancient Babylonian ruler and a 10th century Iraqi mathematician.
A deadline of January 15 has been set for the complete hand over of all the old notes. Given the lack of a functioning banking system the tight deadline is ambitious but the authorities believe that the transfer of the 2,300 tons of new currency can be done through the banking branches currently operating, post offices and government buildings.
This is more than a PR exercise to remove Saddam's face from circulation. A stable, unified currency system is essential for Iraq's long-run economic prospects.
The current system, by contrast, is chaotic. There are two types of Iraqi currency in use at the moment - the 'old dinar' and the 'swiss dinar', which is predominately used in the Kurdish dominated areas of northern Iraq.
The more limited supply of the latter means that it has retained more value than the 'old dinar'. This has been officially recognised in the exchange rates set for the 'new Iraqi dinar'. One 'old dinar' will be replaced by one 'new dinar' but one 'swiss dinar will be converted into 150 new Iraq dinars. The hope is that these rates should equalise prices across Iraq.
With the fall of the old regime in Baghdad there was a significant risk that the Iraqi dinar would cease to serve as an accepted means of exchange. The old currency regime been completely discredited by rampant hyperinflation, poor monetary policy and concerns about widespread counterfeiting.
Saddam had financed government deficits by printing money, for example. Public concerns about fake money has led to any note above 250 dinars (the equivalent of 12 US cents) being treated with suspicion, to such an extent that local press report that the 10,000 dinar note is trading at a 33% discount to the 250 one.
The 'new Iraqi dinar' offers an important fresh start. The new currency should enjoy a new measure of credibility. Counterfeiting should be harder thanks to use of watermarks and metallic inks in the new notes.
The Central Bank's new independence and giving it sole control of the printing press, something that used to be the preserve of the Ministry of Finance, are also important steps. However maintaining that credibility will depend on implementing an effective monetary policy quickly.
Under the previous regime the primary policy tool was the currency peg to the US dollar. In theory interest rates and/or the money supply were altered in order to maintain the parity of one US dollar to 0.3 dinars. The currency peg acted as a monetary anchor for the economy. This has now been abandoned.
The Iraqi dinar has been effectively floating since March, ranging from 5000 dinars to the US dollar to the current rate closer to 2000. Given the lack of Central Bank reserves, the authorities have no other option but to let the dinar continue to float.
This policy vacuum runs risks for the stability of both the economy and the new currency. An economy needs an anchor, whether it is a currency peg or interest rates. But neither option is available to Iraq at the moment – the current state of the banking system precludes setting meaningful interest rates.
As the economy becomes more open, and heavy government controls over trade, prices and wages are dismantled, it will be more vulnerable to rapid fluctuations in external value of the dinar. This is happening quickly, anecdotal evidence suggests that the level of imports has already risen sharply.
Baghdad is full of second hand cars from the UAE and Saudi Arabia, for example. To maintain the stability of the new currency, the Central Bank will have to turn to something that has become very unfashionable among economists and Central Bankers – money supply targeting.
This was widely used in the West in the 70s and 80s and then discarded. But it is the only option at the moment for the Iraqi Central Bank. This holds an important wider lesson for the rest of Iraq's reconstruction and US plans to impose a market style economy - the latest economic fashions are sometimes just impractical.
Currently everyone in Iraq carries a reminder of Saddam in their pockets – on the banknotes they’re using.Shortly after October 15th the first batch of Saddam notes will go to the incinerator.At close of business January 15th 2004 Saddam notes will no longer be legal tender.
Starting on October 15th 2003 a new national currency known as the 'new Iraqi dinar' will begin to replace the existing currency, the 'old dinar', and the currency used in the North of Iraq, the 'swiss dinar'The new Iraqi dinar will create a single unified currency that is used throughout all of Iraq and will also make money more convenient to use in people's everyday lives.
The currency exchange will last from October 15th 2003 to January 15th 2004.Currency can be exchanged at any time during this three month period.Locations where money can be exchanged will include banks and other official locations, for example post offices, throughout Iraq.No fees will be charged for exchanging currency.
WASHINGTON (AP) -- A study by the World Bank and other international organizations estimates that Iraq could handle only $5.2 billion in foreign reconstruction aid next year without problems arising.
Blah, blah, blah.....
For instance, a British firm is being engaged to print new currency for Iraq, this time without Saddam's picture.
Treasury Undersecretary John B. Taylor said Friday that the new Iraqi currency, which will be put into circulation beginning next Wednesday, involved the printing of 2,300 tons of new bills at printing facilities around the world. He said the currency was flown into Iraq on Boeing 747s and delivered by convoy to 250 distribution points, mainly banks, around the country.
Taylor said a Treasury team working in the country over the last several months had made major progress getting Iraq's banking system back in operation.
The country's two biggest banks, Rafidain and Rasheed, now have more than 280 branches open, almost back to the level of operations before the U.S.-led invasion, Taylor told a banking conference in Washington.
"Due to careful planning, individual Iraqis now have access to their deposits and there were no bank runs," he said. "These banks will play important roles in the currency exchange and they have already been instrumental in facilitating the payment of civil servants and pensioners."
Six months ago today Coalition Forces liberated Baghdad –
Blah, blah, blah….
Additionally, we have restored over three-quarters of pre-war telephone services and over two-thirds of the potable water production.
Before the war there were 4,500 Internet connections and important services, such as instant messaging were forbidden.
·Today there are 4,900 full-service connections.
·We expect 50,000 by January first.
Begin to Transform the Economy.
Six months ago all banks were closed.
·Today 95 percent of all pre-war bank customers have service and first-time customers are opening accounts daily.
·Today Iraqi banks are making loans to finance businesses.
·Today the central bank is fully independent.
·Today Iraq has one of the world’s most growth-oriented investment and banking laws.
Six months ago Iraq had two currencies.
·Next week Iraq will get a single, unified currency for the first time in 15 years.
Blah, blah, blah….
Six months ago there was no freedom of expression. Satellite dishes were illegal. Foreign journalists came on 10-day visas and paid mandatory and extortionate fees to the Ministry of Information for “minders” and other government spies.
·Today there is no Ministry of Information.
·Today there are more than 170 newspapers.
·Today you can buy satellite dishes on what seems like every street corner.
·Today foreign journalists and everyone else are free to come and go.
Six months ago Iraq had not one single element—legislative, judicial or executive-- of a representative government.
The smell of burning 250-dinar notes - the Iraqi currency - permeates the air at the Central Bank just a little more than a week before the new currency is to go into circulation. Workers around the central lobby are busy counting new notes in various denominations, which will be available in banks on 15 October.
Since March, Iraqis have been buying and selling virtually all their goods using the purple and blue 250-dinar notes bearing Saddam Hussein's portrait. The notes are the equivalent of about 10 US cents at the current exchange rate. Because banknote printing presses were stolen from the Central Bank, notes of all other denominations are considered suspect by merchants - even a 10,000-dinar note worth about US $3.
Introducing new notes will help stabilise the currency and stop counterfeiting, according to Muhammad Salman Muhammad, the Central Bank governor, who recently unveiled images of the new notes and their security features. The new notes were identical to those in circulation before 1990, Muhammad said. None of them pictures Saddam Hussein.
"Iraq's currency has faced many difficulties over the years", Muhammad told IRIN in the capital, Baghdad. "This currency will be hard for counterfeiters to duplicate. It will also stabilise the general level of prices", he added.
Exchange rates bounced around like tennis balls after the former regime fell in April, but appear to have stabilised recently at about 2,000 dinars to the dollar. As bank employees count stacks of the new money, rubber-banded together in blocks, money changers on the street are discussing how they will be affected. Some speculators who have kept the 10,000-dinar notes stand to make money on the deal. Many of them bought the 10,000 note from residents at a rate much lower than its worth, after people panicked when merchants refused to accept it. Those speculators will be allowed to turn it in for the full value.
One man who recently started working as a money changer said it was not as easy as he had thought it would be. "I thought I'd make money in this business, but I'm losing my shirt", 32-year-old Kase al-Sharra, who owns a barber's shop near two central hotels where many foreigners are staying, told IRIN. "I have no phone, so I can't change my rate when the official rate changes".
While the first old 250-dinar notes are already being burned, residents could not start exchanging their old money for the new before 15 October, Muhammad said. The changeover will continue until 15 January. No banks in central Baghdad other than the heavily fortified Central Bank are operating at the moment, an issue Muhammad declined to address.
Meanwhile informal money changing is proceeding briskly around the city. "No banks are open now, because there's no security", Nur al-Din, told IRIN, another money changer who has set up shop near al-Sharra's. "This money changing is safe. Who would want [to steal] these notes?"
The new denominations will range from 50 dinars to 25,000 dinars. Security features include a silver strip embedded in the note as dashes that appear as a continuous line when held up to the light. Watermarks and metallic ink are also embedded into various notes.
Along with having more security features, the new currency will also bring northern, central and southern Iraq back together, according to Muhammad. Residents in the north have been using the "Swiss dinar" - so named for having been printed in Switzerland - for more than 10 years.
Exchange rates were arrived at after discussions with Iraqis, Muhammad said, but he declined to be more specific. Government workers, including teachers and many hospital staff, received "emergency payments" of $20 each in May. The payments flooded the market with dollars, which drove the price down against the extremely weak Iraqi dinar, al-Sharra said.
"Central Bank officials will be able to control the new currency better than they are the current money", Muhammad said. Many Iraqis try to keep money in dollars now, although most business transactions are done in dinars. The country is awash with fake 250-dinar notes, which are smaller than the originals. Police recently foiled several counterfeiting rings, seizing several printing presses and bales of official currency paper.
"We expect the Central Bank to be a core element in the stability of the exchange rate", Muhammad explained. In the meantime, the exchange tables continue to do a brisk business in the colourful, oversized 250-dinar bill.
"I don't know about the future, but dollars are more stable for now", al-Sharra said. "I'm also keeping the 10,000 notes, even the fake ones, because the Central Bank will take them sooner or later".
This Item is Delivered to the "Asia-English" Service of the UN's IRIN humanitarian information unit, but may not necessarily reflect the views of the United Nations. For further information, free subscriptions, or to change your keywords, contact e-mail: IRIN@ocha.unon.org or Web: http://www.irinnews.org . If you re-print, copy, archive or re-post this item, please retain this credit and disclaimer. Reposting by commercial sites requires written IRIN permission.
New Iraqi Currency Unveiled in Effort to Foil Counterfeiters And Stabilize Rates
By Theola Labbé Washington Post Staff Writer Sunday, October 5, 2003; Page A26
BAGHDAD, Oct. 4 -- The Iraq Central Bank today unveiled new bank notes bearing scenes from Iraqi life and history in place of the face of ousted president Saddam Hussein. The bank also announced the start of auctions in an effort to bring stability to the wildly fluctuating exchange rates of the currency, the dinar.
In the auctions, banks bid to buy dinars, setting an exchange rate that will remain in effect for at least several days, said the bank's deputy governor, Ahmed Salman, at a news conference in the lobby of the bank's headquarters. At present the rate can fluctuate hour by hour.
Salman said two banks took part in the first auction.
"This is the first time we have done this in Iraq," Salman said. "We hope in a short time we'll reach a stabilized exchange rate, especially against the U.S. dollar."
Salman displayed the designs of the new bank notes, which will enter circulation beginning Oct. 15. Instead of the current five, there will be six kinds of bills, ranging from 50 dinars, about 4 cents at current exchange rates, to 25,000 dinars, about $18. The images on them include lions from the ancient city of Babylon and the face of a 10th-century mathematician.
Two local currencies are in use in Iraq, one known as the Saddam dinar because the notes bear his likeness, the other the Swiss dinar because it was once printed in Switzerland. It circulates in the mostly Kurdish regions in the north. The U.S. dollar is also widely used.
"The new currency will be one currency for one united Iraq," Salman said.
Plans call for Iraqis to exchange their old notes for new ones by Jan. 15. A Saddam dinar will be exchanged for one new Iraqi dinar, and a Swiss dinar for 150 new Iraqi dinars.
Salman said the first printing of the new dinar would be in "sufficient quantity" to meet the needs of the first three months of circulation. He declined to provide specific numbers, citing security precautions. The initial printing will also cover up to two years of reserves, he said.
This will be the second time Iraq's currency has been re-created due to war. In 1990, after Hussein invaded Kuwait and the United Nations imposed sanctions on Iraq, the country was forced to print its own money. Iraqis went from using coins called fils and bank notes without Hussein's likeness, in denominations of 25 dinars or less, to five new denominations printed on cheap paper that all bore the president's picture.
With counterfeiting a rampant problem, the new bank notes will have security features including a centerline thread, watermarks, metallic ink and raised letters.
Basil Twaij, 32, who with an older brother runs one of the sidewalk exchange shops that dot the city, pored over the colorful flier announcing the new currency and said he was happy it would likely be more difficult to counterfeit.
Since Baghdad was captured by U.S. forces in April and looters stole the government's printing presses, fake notes have abounded, Twaij said, and he has had to carefully examine the money his customers bring in to avoid being cheated.
At that point, his brother Basim, 41, looked at his hands and mimicked checking a bill for a security thread. "We want to take a break from checking the money," Basim Twaij said.
Basil Twaij chimed in: "We'll be left with just counting, not checking."
Hammurabi, 10th century mathematician replace deposed dictator on new currency - CNN.com October 6, 2003: 9:38 AM EDT
BAGHDAD, Iraq (Reuters) - Iraq has unveiled new banknotes with pictures of an ancient Babylonian ruler and a 10th century Iraqi mathematician in place of the smiling face of Saddam Hussein.
The Babylonian ruler Hammurabi, credited with creating the first written code of laws in human history, graces the new pink 25,000 dinar note, worth about $12. The other side shows a smiling Kurdish farm worker holding a sheaf of wheat.
Astronomer and mathematician Abu Ali al-Hasan ibn al-Haytham, born in Basra in 965 and known as Alhazen to medieval scholars in the West, is on one side of the 10,000 note, the only other human figure on the new notes.
Other bills show a waterfall in northern Iraq, date palms and Islamic monuments. One has a picture of a wheat silo.
The layout of the notes is familiar to Iraqis as they are based on the so-called "Swiss dinar," which was used in Iraq before the Saddam banknotes were introduced and still circulates in northern Iraq, governed as an autonomous region by Kurds since it was wrested from Saddam's control in 1991.
The new notes are printed by the same firm that made the old "Swiss dinar" -- Britain's De La Rue Plc.
It has printed enough new dinars to replace the four trillion dinars now circulating across Iraq as well as an extra amount for reserves, a central bank official said Saturday.
Iraqis have three months from October 15 to exchange their old bills at 250 bank branches across the country, at a rate of one new dinar to one Saddam dinar and 150 new dinars for each Swiss dinar.
The U.S-led administration in Iraq has ordered all images of Saddam to be removed from monuments, murals and school textbooks. But in the months following the war it was forced to print billions of dinars of banknotes bearing the face of Saddam, to ease a shortage of low-denomination banknotes.
Deputy Central Bank Governor Ahmed Salman Mohammed also announced that the newly independent institution had sold Iraqi dinars earlier in the day at a rate of 1,900 dinars to the dollar in the first of what will become regular foreign exchange auctions.
"We hope that in a short time we will establish a stable price for the Iraqi dinar against other foreign currencies, especially the U.S. dollar," Mohammed said.
Along Rasheed street outside the central bank, which is protected by a massive iron fence, barbed wire and blue-shirted guards toting Kalashnikov assault rifles, foreign exchange dealers offered the dinar at around the same rate.
Most Iraqis mainly use the 250 dinar banknote at present -- which means sackloads of money have to be hauled around for any large purchases.
October 6th 2003 – Translation of Arabic Press
(poor translaiton)
Kuwait dines receiving Iraqi trust American force.
Baghdad destroys old paper currency to introduce new currency.
Iraqi Finance Ministry desires to destroy 4000 Billion Iraqi Dinar with issue new Iraqi Currency by the middle of this month.Ministry of Finance spokesman said: The operation of destroy includes current currency having previous president Saddam Hussain that has been in southern area.
The civil administrator Mr. Paul premer has announced in Jun.July the changes of new currency which shall be printed abroad.It is believed that the new currency printed in Briton specified with security to avoid guilty from 15/10/2003.The Ministry added that is has been three months limited to comply with new currency replacement concluding foreign deposits. Added: All currency will change with no exemption including doubtable currencies.
Other way Kuwait Central Bank Monitory Governor Sh. Salim Abdul Aziz Al Sabah denied that the US Force had been deposited a large amount in Dollar in private bank of former Iraqi system which was surrendered after falls in April.
Sh. Salim Al Sabah said in a declaration to news papers that the Kuwaiti bank sector a stopper against asset washing operations on financing for terrorism because equipment and steps taken by central bank which is responsible to avoid utilize and Kuwait financial est. against doubtable operations.
About financial transactions fro to Kuwait Sh. Salem said: Present system in Kuwait is allows moving of funds without any objections on movement.Subsequently there is any limitation to roof the movement of fund.He added beyond the protection the operations of currency washing the banks and exchange companies to report about services and monitory auditing which will rises more than 3 thousand DK with obligation to ensure the fundamental transfer details and utilizing authority.
October 3, 2003
Gulf News - Dubai
NEW CURRENCY UNVEILED MINUS SADDAM’S IMAGE
Bills come with anti-counterfeiting features
Baghdad (AP) Iraqis Central Bank yesterday unveiled the country’s new currency- bank notes without the most distinctive feature of the old bills, the image of Saddam Hussain.
“The new currency is one currency for the entire country.” said Deputy Bank Governor Ahmed Jaburi during a ceremony show casing the new money.
The new Iraqi dinars – which will be converted at a rate of one to one – will go into circulation from October 15 and Iraqis will have a three months to Ex change old money for new bank notes.
The US-printed bank notes come in six denominations – 50, 250, 1,000, 5,000 10,000 and 25,000, and look similar to the Iraqi national currency used before 1990, popularly known as “Swiss dinars”The new bills were designed with anti-counter-feiting features.Standing before giant images of the new notes, Jaburi pointed to the colour-changing images, watermarks, embedded security thread, and raised letters that will make it more difficult to forge.
Earlier this week, the Pentagon said that US agents assisted by Iraqi police had broken up a counterfeit printing operation and seized 100 billion in fake dinars.
With fluctuating ex-change rates recently, that would amount to anywhere from $30 million to $70 million.
In an attempt to nationalize the new currency Iraqi officials said the new dinars will also replace the Swiss dinar, which is still being used in northern Kurdish-controlled Iraq.
Yesterday, some Iraqis expressed doubts that the issuance of a new currency alone will help shore up the devastated economy.
October 3 2003
WWW.CPA-IRAQ.ORG
Iraq Currency Exchange
Starting on October 15th 2003 a new national currency known as the ‘new Iraqi dinar’ will begin to replace the existing currency, the ‘old dinar’, and the currency used in the North of Iraq, the ‘swiss dinar’.The new Iraqi dinar will create a single unified currency that is used throughout all of Iraq and will also make money more convenient to use in people’s everyday lives.
The currency exchange will last from October 15th 2003 to January 15th 2004.Currency can be exchanged at any time during this three month period.Locations where money can be exchanged will include banks and other official locations, for example post offices, throughout Iraq.No fees will be charged for exchanging currency.
The conversion rates for new Iraqi dinars will be as follows:
one ‘old dinar’ will be exchanged for one new Iraqi dinar;
one unit of the ‘swiss’ dinar will be exchanged for 150 new Iraqi dinars.
Bank accounts and financial contracts in Swiss dinars will also be converted at the rate of 150 new Iraqi dinars for every one Swiss dinar.Bank accounts and contracts in old Iraqi dinar will not change.
The new currency will have a larger number of denominations than the old currency, with 50, 250, 1000, 5000, 10000 and 25,000 dinar notes, making it more convenient to use.The new notes will be of higher quality and durability than those currently in circulation and include many anti-fraud features that will provide important protection against counterfeiting.
How will the exchange occur?
(1)People will come to banks with their currency
(2)Currency will be counted and its equivalent value in new currency will be paid
(3)Old currency will be promptly marked and will then be destroyed
(4)Those with bank accounts will see their balances automatically converted.Salaries will begin to be paid in the new dinar at the earliest available opportunity.
Currently everyone in Iraq carries a reminder of Saddam in their pockets – on the banknotes they’re using.Shortly after October 15th the first batch of Saddam notes will go to the incinerator.At close of business January 15th 2004 Saddam notes will no longer be legal tender.
Below are some answers to frequently asked questions:
What will the new currency look like?
The new Iraqi dinar will look similar to Iraq’s old national dinar (the ‘Swiss’ dinar), with some minor modifications
What will be the rate that is used to convert old currency into new currency?
People who hold one old Iraqi dinar will receive one new Iraqi dinar.People who have one ‘Swiss’ dinar will receive 150 new Iraqi dinars.
Why were these rates selected?
These rates will help to equalize prices throughout all of Iraq – helping to ensure that the prices of goods will be roughly the same across the whole country.Key Iraqis, including officials at the Iraqi Central Bank as well as leaders of the autonomous regions in northern Iraq, were consulted on this issue and fully supported this decision.
How will the new currency differ from the existing currency?
The new currency will have a total of six denominations, will be much better protected against counterfeiting, and will last much longer because it will be of higher quality.
Will people need to exchange their currency immediately?
No.Currency can be exchanged at any time up until January 15th.
Will the old Iraqi dinar and the Swiss dinar continue to be valid until January 15th?
Yes.All existing currency will be completely valid until Janaury 15.
Will salaries be paid in new dinars?
Yes.After the exchange has begun, salaries will begin to be paid in new Iraqi dinars.
How will people be able to identify counterfeit currency?
As the exchange approaches additional details will be provided about how to identify counterfeit notes.
Staff at currency exchange sites will also be well trained on how to detect counterfeit Iraqi dinars
Counterfeit old Iraqi dinars will not be accepted at the exchange sites.Those presenting counterfeit notes will not be arrested or charged with a crime, but their money will not be exchanged.
Currency exchange sites will visibly mark old dinars upon their exchange for new ones so that they cannot be stolen and re-exchanged later.Once the old currency is marked it will no longer be valid currency.
Will the new currency be convertible into other currencies?
Yes.The new currency will be convertible into other currencies at the market exchange rate that prevails at that time.
Can dollars also be exchanged for new Iraqi dinars?What will be the conversion rate for dollars?
Dollars will not be converted directly into new dinars during the official exchange.Following the exchange, dollars will be convertible directly into new dinars at the market exchange rate.New dinars will also be convertible into dollars as well as other currencies at the market exchange rate.
Will it be possible to exchange currency outside of Iraq?
No.The only official currency exchange locations will be located within Iraq.
They had an economic structure that was irrational and extremely intrusive.
Comment on this story
AGHDAD, Iraq, Oct. 15 — At a heavily guarded warehouse at the Baghdad airport, which ordinary Iraqis cannot enter without American permission, Commerce Secretary Donald L. Evans said on Wednesday that violence in Iraq is isolated and that foreign investors should seize opportunities here.
