Why Does Not Iraq Re-Adopt The Coin?
Why Does Not Iraq Re-Adopt The Coin?
Rami Al-Salihi 17-March-2023
Why does not Iraq re-adopt the coin?
With the increase in inflation in the local markets, the discussion returned in economic circles about the reasons why Iraq did not resort to issuing coins with the aim of restoring the value of the small currency, which has become worthless in daily transactions.
Economists believe that coins facilitate many of the daily banking transactions
The Central Bank is the only one responsible for supplying the country with its banknotes and coins, while Iraq stopped its dealings with "coin" years ago, despite the continuation of its work after 2003.
SIMILAR TO DEVELOPED COUNTRIES (GETTY)
Not long ago, the Finance Committee in the Iraqi Parliament called on the central bank to reintroduce the "metal currency", justifying that "this gave strength to the economy of countries in the Middle East."
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Why does not Iraq re-adopt the coin? GettyImages-159064923Gold coins found in an archaeological site in Wasit Governorate, dating back 1,500 years
Reasons not to deal with it
Jalil al-Lami, an expert in economic and financial affairs, says that the metallic currency is considered one of the most important features of the economic and financial system in the world, but that Iraq "is missing it today, although its circulation was great in the last century."
According to Al-Lami, small coins facilitate many daily banking transactions, as "the use of metal denominations and their circulation will give the currency a legal value."
According to Al-Lami's interview with Ultra Iraq, most of the neighboring countries find that "the exchange rates of their local currency are very high against the dollar, and they basically own a coin through which they work to preserve the currency and not need to request more banknotes, especially in small denominations." .
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Why does not Iraq re-adopt the coin? GettyImages-159064923
Photo | From the Ottoman era to now.. The chronology of the Iraqi currency LINK
The reason for the neglect of the coin in Iraq is due to "the high cost of minting the coin, which costs more than the paper currency, in addition to the difficulty of carrying it for citizens," Al-Lami points out.
And after the inflation occurring in the economy - and speaking to the illiterate - it became difficult to mint coins and make them circulated among citizens, so "the step of deleting zeros is supposed to precede the coin minting process so that there is value for small denominations against large ones, and then resort to minting coins."
Iraq witnessed the issuance of the first new currency during the year 1931 , and it consisted of bronze coins.
Why does not Iraq re-adopt the coin?
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No coins effect
However, there are those who believe that the non-use of this currency is due to a technical or procedural reason and is not related in any way to inflation, according to the economist, Hussein Jaber, who justifies this by saying that "if the thousand dinars paper or metal denomination is used, if any, then this does not cause any change in the level." price, as it is a means of exchange and transfer of value between the seller and the consumer.
And the inflation in prices that most people feel is in the inflation of the number and not the value, because the Iraqi dinar - according to Jaber - is still legally "equal to 1,000 fils, and because of the excessive cash issuance, it has become equal to 1,000 dinars, which in reality is one dinar," confirming "then There is no effect of using the coin."
Jaber told Ultra Iraq, "The coins are used for small denominations of the currency as small parts that give greater flexibility in dealing and achieve a measure of justice for the benefit of consumers. As for large coins, they are not replaced with coins for technical considerations."
Important pluses
However, Jaber acknowledges that the coin has advantages that are reflected in the income of consumers and those with limited incomes, such as employees, retirees, and others.
He explains that “coins, being small denominations and forming parts of the large currency, can cover price differences in a flexible manner without loss to the consumer or the seller, and limit the exceptional profits that sellers achieve by selling their cheap goods at higher prices that are compatible with the available currency denominations, for example:
The price of a small bottle of water is 135 dinars in wholesale, its price with profit is 175 dinars, but the sale price to the consumer will be 250 dinars, as there is no category smaller than 250 dinars to return to the consumer, so he has to accept this price with one bottle or buy three bottles for 500 dinars even if he is not need it.”
Why does not Iraq re-adopt the coin?
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And about the high prices of its production, Jaber adds that "the cost of making it is less than the cost of paper, and also the banknotes that are perishable, burning, tearing, and so on, are not quickly damaged."
Economists saw that the elimination of inflation in Iraq is in the digital automation of currencies
As for the negative aspects of the coin, it is almost non-existent, as it cannot be used for commercial transactions and is limited to individual transactions, according to the vision of the economic expert, Hussein Jaber.
Expensive coins
Shortly after the US invasion of Iraq , the Central Bank of Iraq announced that it offered coins in denominations of 25, 50 and 100 dinars for circulation for the first time after they were canceled by Saddam Hussein's regime after the Gulf War in 1991.
Why does not Iraq re-adopt the coin? 2004
However, the continuous inflation in the local markets, with its internal and external causes, devoured the small Iraqi currencies, and they have no material value, according to the economist, Nabil Al-Tamimi.
Al-Tamimi told Ultra Iraq, "The issuance of cash costs the central bank's treasury a lot of money," considering that "the best solution to eliminate economic inflation in Iraq is to automate currencies digitally."
He explains that "transferring currency trading digitally will restore the value of small currencies, especially since most of the world's economically developed countries no longer depend on cash transactions." LINK