Iraq Economic News and Points To Ponder Wednesday Morning 8-19-26
"Reform or monetary gamble?" The National: Fears that removing zeros will disrupt markets and shake confidence in the dinar
Baghdad - One News A report by The National has brought the issue of removing zeros from the Iraqi dinar back to the forefront, amid what officials described as serious discussions within the Central Bank, at a time when Iraq is facing increasing pressure on the budget and a decline in oil revenues.
The website quoted Ahmed Rashid, a member of the parliamentary finance committee, as saying that the project is still in the discussion phase and has not yet turned into a draft law or reached the House of Representatives, but he stressed that the current discussions are more serious than previous phases due to the economic and financial conditions that the country is going through.
According to the report, one of the main motives of the project is to try to address the huge amount of liquidity outside the banking system, as estimates indicate that there are about 70 trillion dinars outside the control of the monetary authority, out of about 125 trillion dinars in circulation.
Supporters of the project believe that replacing the old currency with a new one may encourage people with hoarded money to take it out of their homes and safes and return it to the banking system, thus allowing for an expansion of the amount of money passing through the formal financial system.
However, the report also pointed to concerns that the process of removing zeros could become a costly and confusing step for markets if it is not preceded by broader reforms in the banking sector, addressing the heavy reliance on the dollar, corruption, and weak confidence in financial institutions.
The National also pointed out that Iraq remains a largely cash-based society, with millions of citizens keeping their savings outside banks as a result of decades of wars, sanctions, crises and banking scandals, making any large-scale currency replacement extremely sensitive.
The project comes at a time of severe financial pressure, as oil exports, which had reached about 3.4 million barrels per day after the outbreak of war and the closure of the Strait of Hormuz, have declined, before returning since the beginning of August to an average of nearly two million barrels per day.
This was reflected in oil revenues, which represent at least 90% of the federal budget, as they decreased from about $6.8 billion in February to about $2.3 billion in May and June, at a time when Iraq needs about $6.5 billion per month to cover salaries, pensions and social welfare.
The report noted a conflict in official positions regarding the stage the project has reached, as Communications Minister Mustafa Sand said that the decision to remove zeros and change the currency had been made, suggesting the possibility of starting implementation in 2027 and the replacement process continuing for three years or more.
In contrast, government spokesman Haider al-Aboudi denied that the cabinet had made a decision on this matter, stressing that the file falls within the powers of the Central Bank and needs to go through the legislative process and be approved by the House of Representatives, while no detailed position was issued by the Central Bank regarding the mechanisms of the project or its timing.
The report indicates that the experiment, if approved, may include a transitional period during which the old and new currency will circulate together before the old banknotes are gradually withdrawn, similar to the experiences of countries that have previously removed zeros from their currencies.
The National concludes that the real dispute is not about removing three zeros per se, but whether Iraq can transform the process into a broader monetary reform that returns hoarded funds to banks and strengthens confidence in the dinar, or whether it will remain a cosmetic step with high costs and risks for the market if it does not address the structural problems of the economy. https://1news-iq.net/إصلاح-أم-مغامرة-نقدية؟-ذا-ناشيونال/
The Central Bank Of Iraq Concludes A Training Course On OFAC Sanctions Compliance Requirements.
The Compliance Office at the Central Bank of Iraq concluded a specialized training course titled "Compliance Requirements for OFAC Sanctions," held from August 9 to 11, 2026.
The course aimed to enhance the knowledge of staff in compliance and anti-money laundering/counter-terrorism financing (AML/CFT) reporting departments regarding the requirements and mandate of the Office of Foreign Assets Control (OFAC), sanctions programs, and implementation mechanisms. It also covered the Specially Designated Nationals (SDN) List, name verification procedures, and protocols for screening customers and transactions.
This course reflects the Central Bank of Iraq’s commitment to raising awareness of compliance requirements and enhancing the competence of banking sector personnel, thereby contributing to the improvement of oversight procedures and adherence to standards related to combating money laundering and the financing of terrorism.
Central Bank of Iraq Media Office August 18, 2026 https://cbi.iq/news/view/3292
Iraq Revives Debate Over Removing Three Zeros From The Dinar
2026-08-18 12:21 Shafaq News- Baghdad Debate has resurfaced in Iraq over a long-discussed plan to remove three zeros from the dinar, with lawmakers considering whether to include a “currency redenomination law” in a package of economic measures.
The proposal has remained under study for years as the government faces liquidity pressures and difficulties financing public spending and salaries.
Supporters argue that redenominating the currency could simplify transactions and streamline cash circulation. Economists interviewed by Shafaq News, however, caution against treating the measure as a solution to underlying financial problems that cannot be resolved by changing the currency’s denomination.
The debate intensified after Communications Minister Mustafa Sanad announced on Saturday that the government had decided to remove zeros or change the currency, linking the move to stolen public funds. He estimated the value of those funds at about 8 trillion dinars ($6.1B) and suggested that a new currency could render them unusable after the transition.
The Central Bank of Iraq began studying the proposal in 2007. In 2024, former Central Bank Governor Ali Al-Alaq confirmed that the project was “still in place,” although no implementation date was set.
Economic researcher Ahmed Eid considers the timing “economically inappropriate,” given Iraq’s financial pressures, liquidity shortages and rising government obligations. Speaking to Shafaq News, he argued that the priority should be addressing the causes of the financial crisis rather than changing the currency’s nominal value.
“Removing zeros does not provide new liquidity, finance salaries, or reduce the deficit and public debt,” Eid explained, adding that the measure would neither increase citizens’ purchasing power nor raise the dinar’s real value.
Under a three-zero redenomination, 1,000 old dinars would become one new dinar. Salaries, prices, savings, debts and contracts would all be converted at the same rate, leaving people’s real wealth unchanged.
Eid also warned that introducing the reform at a time when Iraq relies heavily on cash transactions, while financial literacy and market oversight remain limited, could create additional risks. Price increases, speculation and confusion over contracts, savings and other transactions could follow if the transition were poorly managed.
His objection, he stressed, was not to removing zeros as a monetary tool, but to linking the measure to the current financial crisis. Changing the numbers on banknotes, he maintained, would not address the economy’s underlying imbalances.
Economic journalist Salam Zidan views the primary function of redenomination as reducing the number of digits and simplifying calculations. Government budgets currently expressed in trillions of dinars, for instance, would be stated in billions under a three-zero change.
A salary of 1 million dinars ($763) would become 1,000 new dinars if three zeros were removed, while a one-zero reduction would turn it into 100,000 new dinars, Zidan explained.
The measure would not, however, resolve economic distortions. Zidan pointed out that people holding illicit funds could convert their money into gold, silver, real estate, or US dollars before a currency exchange, limiting the ability of changing banknotes alone to uncover illicit wealth.
Any redenomination would also require new banknotes, updated banking systems, ATMs, electronic payment platforms, government and corporate accounts, and a transition period during which the old and new currencies could circulate simultaneously. Authorities would need to clarify the new values of prices, contracts and salaries to the public.
Financial and banking specialist Mustafa Hantoush explained that current spending is being managed under the 1/12 rule, based on the previous year’s actual expenditure. Using 2025 figures, this permits spending of up to about 152 trillion dinars ($116 billion), although reaching that level would be difficult under current revenue conditions.
Hantoush told Shafaq News that the government is seeking to contain expenditure by restricting outlays to essential priorities while relying on borrowing through the Central Bank and discounting treasury bills to cover a deficit estimated at 6 trillion dinars ($4.6B) a month.
The pressure has been compounded by a sharp decline in oil revenues linked to disruptions following the closure of the Strait of Hormuz. Iraq relies on oil for the majority of its budget revenues, leaving its public finances highly exposed to changes in oil exports and prices.
Against that backdrop, experts argue that spending reforms, revenue diversification and stronger productive and financial sectors would do more to support the dinar’s stability than changing its denomination.
Economic expert Karim Al-Hilu noted that the three zeros have come to be associated with periods of war and sanctions. The idea has been raised repeatedly over the years, including during Nouri Al-Maliki’s premiership, but has never been implemented.
Al-Hilu sees a new currency as potentially giving the dinar “new strength” while bringing some cash circulating outside the banking system back into circulation through formal channels.
At the same time, he acknowledged that a significant share of funds linked to people accused of theft may already be held in gold, dollars and real estate rather than Iraqi currency.
He cautioned that requiring citizens to prove the source of their funds when exchanging old banknotes could cause widespread disruption without clear procedures. An abrupt implementation, he warned, could bring parts of the market to a standstill.
Despite those risks, Al-Hilu believes the reform could eventually become necessary and, if properly implemented, could strengthen the dinar.
The discussion also coincides with proposals to bring cash held outside banks back into the financial system. One proposal estimated the total cash supply at about 113 trillion dinars ($86.3B), including roughly 106 trillion dinars ($80.9B) outside banks, and called for efforts to return about 10 trillion dinars ($7.6B) to the banking system.
In 2024 and 2025, experts warned that removing zeros would require months of preparation, tighter banking and security controls, monitoring at borders and airports, and scrutiny of the sources of funds, stressing the need for exchange-rate and political stability before undertaking the reform.
They also warned of the costs of printing new banknotes, counterfeiting, money laundering and social disruption. Calling for stronger productive sectors, they argued that the strength of a currency depends not on the number of zeros but on an economy capable of producing goods and services.
https://www.shafaq.com/en/Economy/Iraq-revives-debate-over-removing-three-zeros-from-the-dinar