Iraq Economic News and Points To Ponder Monday Morning 8-24-26
Iraqi Hopes For Removing Zeros From The Dinar To Combat Corruption
Baghdad Ahmed Eid The proposal to remove zeros from the Iraqi dinar has brought back to the forefront a wide debate about the reality of the project, the possibility of its implementation, and the results that it can achieve, especially with its connection to returning hoarded funds to the banking system and revealing some of the funds resulting from corruption, in addition to questions about its impact on inflation, the value of the dinar, and purchasing power.
The debate gains even greater importance with the sheer volume of currency in circulation in Iraq, as the value of the currency issued by the Central Bank exceeds 101 trillion dinars (about 77 billion US dollars), of which more than 94 trillion are in circulation among the public, compared to about 7.3 trillion dinars held by banks.
The debate centers on the extent to which removing zeros and replacing the currency will encourage those with large sums to pass their money through banking channels and subject it to verification of its sources, which may help in uncovering corruption funds, versus questions about the economic feasibility of the project, its cost and risks, and whether it is actually able to address inflation and enhance the value of the dinar.
Days after Communications Minister Mustafa Sanad declared that the decision to remove zeros and change the currency had been finalized, linking it to the release of hoarded funds and the handling of approximately eight trillion dinars he claimed were looted, the government denied the existence of any official decision in this regard. Ministry spokesperson Haider al-Aboudi stated that the Cabinet had not made a decision to remove zeros, nor had the Central Bank made a similar decision, emphasizing that the matter requires legislation from Parliament.
To date, the Central Bank has not announced an implementation plan or a timeline for initiating the process, leaving the project still under discussion and not yet a binding decision.
In this context, Ahmed Rashid, a member of the Finance Committee in the House of Representatives, said that the project to remove zeros, if it proceeds, should be seen as part of a broader path to reform the financial and banking system, to contribute to returning some of the funds hoarded outside banks to official channels, especially if the currency replacement process is accompanied by clear banking and regulatory controls.
Rashid added, in an interview with Al-Araby Al-Jadeed, that replacing large amounts of cash will require huge sums to pass through banks and authorized entities, which could provide an opportunity to verify the sources of large sums in accordance with the laws in force to combat money laundering and corruption, and help regulatory bodies to monitor transactions and funds whose sources are suspected.
He stressed that removing zeros does not automatically mean recovering looted funds without legal procedures and investigations, noting that a project of this size needs a suitable economic environment and an in-depth study involving the Ministry of Finance, the Central Bank, the Financial Control Bureau and the Parliamentary Finance Committee, before it is formulated into a draft law and presented to the House of Representatives.
Rashid explained that the project is still under discussion and has not yet reached Parliament in a legislative form, indicating that removing zeros should not be presented as a standalone solution to economic problems or a means to increase purchasing power, as its results remain linked to the accompanying fiscal and monetary policies.
For his part, banking expert Abdul Rahman Al-Sheikhli believes that removing three zeros from the dinar is technically possible, but its success depends on the availability of a stable economic and monetary environment, foremost among which is the stability of the exchange rate and reducing the gap between the official and parallel rates. He stressed that removing zeros does not in itself mean an increase in the real value of the dinar or an increase in the purchasing power of the citizen.
Al-Sheikhli explained to Al-Araby Al-Jadeed that changing the currency does not change the size of the wealth or real income, as the prices of goods, salaries, deposits and debts will change in parallel.
Therefore, betting on removing zeros to raise the value of the dinar may give an unrealistic impression of the results of the process, in addition to the financial cost resulting from printing the new denominations, withdrawing the old currency and updating banking and accounting systems.
He stressed that removing zeros does not represent a cure for inflation, because controlling rising prices is linked to managing liquidity, public spending, monetary policy, and levels of production and imports.
Therefore, the success of the experiment requires addressing these factors before implementing the process, and not relying on removing zeros to address them.
Al-Sheikhli warned that choosing an inappropriate time could disrupt pricing, contracts, and bank accounts, and increase demand for the dollar out of anxiety or speculation.
He pointed out that the true feasibility of the project should be measured by what it achieves in facilitating transactions and reducing the cost of handling and managing a huge amount of cash, and not by the number of zeros that disappear from banknotes.
For his part, economist Ziad Al-Hashemi believes that removing zeros, if coupled with currency replacement within a sound monetary plan, could give the central bank greater ability to control the money supply and bring back some of the money circulating outside official channels into the banking system, thus reducing the scope of illicit money movement within the economy.
Al-Hashemi explained to Al-Araby Al-Jadeed that the success of this mechanism depends on the state’s ability to prevent those who have acquired funds from corruption from converting them during the transitional period into other assets, such as real estate, dollars, or gold.
He pointed out that subjecting large purchase and transfer operations to scrutiny of the sources of funds can narrow the avenues for recycling that liquidity, but it does not eliminate it entirely.
Al-Hashemi pointed out that the success of the operation in curbing illicit funds is not related to the removal of zeros in itself, but rather to the design of the exchange period and the restrictions imposed on the movement of funds during it, warning that announcing early, ill-considered procedures may give owners of illicit liquidity an opportunity to convert it into dollars, gold, or real estate before the exchange begins. August 22, 2026 | Last updated: 03:03 (Jerusalem time)
https://www.alaraby.co.uk/economy/تعويل-عراقي-على-حذف-أصفار-الدينار-لملاحقة-الفساد
Al-Shiqr: Eliminating Zeros From The Currency Is A Worthless Step Unless The Iraqi Dinar Is Pegged To The Dollar
Iraq Al-Hadath Satellite Channel @iraqlhadath
Translated from Arabic
Al-Shiqr: Eliminating zeros from the currency is a worthless step unless the Iraqi dinar is pegged to the dollar.
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Video Translation below:4m
Greetings to you and to our dear colleagues, and greetings to brother Mustafa Sanad as well.
Yes.
He explained a matter—strictly speaking, it falls outside the scope of the Communications sector, but in Iraq, he is a member of the Council of Ministers, so he has the right to discuss any topic.
Yes.
So, I don't believe he spoke outside the scope of his duties.
Right.
However, what he revealed is that there is indeed a committee carefully studying the concept of—what is called—"dropping the zeros"; I actually dislike that term.
Dividing by 1,000.
25,000 becomes 25 dinars.
Right.
So, 1,000 dinars becomes 1 dinar.
A dinar.
And 500 dinars becomes, say, 500 fils, and so on.
Yes.
I think it’s a good idea. For the record—as the Secretary-General of the Najah Center—where is the camera here?
It’s clear, Doctor.
We first raised this issue back in 2018. The key point we proposed was issuing a new Iraqi dinar backed by gold, or pegging the dinar to a basket of foreign currencies.
That was the key point.
The dollar and the pound...
The dollar, the pound, and the euro—exactly. That was the main point: what is the benefit if 1,000 dinars simply becomes 1 dinar, yet the market value of the dinar remains the same?
We want to strengthen the economy.
Strengthening the economy depends on...
All economists know this: pegging the local currency's exchange rate to the dollar.
Right.
So, I did something that might have an impact.
Before that, Doctor—who would allow Iraq to just go ahead and drop the zeros?
Dropping three zeros to leave just one dinar?
What is the benefit?
If you haven't coordinated with the US Federal Reserve or the US Treasury, what is the benefit? There’s no real benefit.
I mean, what’s the point of getting 25?
If you set it at 25 dinars, and tomorrow it hits 60, then there’s no difference at all.
Well, the point is that once you peg the dinar’s rate, you’ll see the difference relative to the US dollar.
I can actually give you a copy of this—here you go, if you’re interested.
I.
It shows three neighboring Arab countries.
Right, let’s move on to the policy aspect.
Sure.
So, the red line represents the Jordanian currency.
This covers the period from 1975 to 2005—that’s 50 years.
It’s clear.
Regarding that red line: they had currency issues—fluctuations—but in 1990, they decided to peg it to the dollar.
Throughout that entire period, it was a straight line—no changes whatsoever.
From 1990 to the present—exactly.
The Jordanian dinar itself.
What is the blue line? The UAE?
The year 1980.
They pegged the currency; it became a straight line—no fluctuations.
From 1980 to the present; and Saudi Arabia did the same, up until around 1990.
They pegged it, and it became a straight line.
This is the goal of the Central Bank of Iraq.
Iraq: we’ll cross that bridge when we come to it.
My dear...