Facts About Currency in Iraq
The currency of Iraq has been through several changes during its history. The Gulf War prompted a revamping of the Iraqi monetary system and the enacting of new laws to regulate currency exchange and to enhance security. The result has been an internationally accepted and stable currency system that continues to be evaluated and refined to meet the needs of Iraq and the world markets.
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Early History
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Iraq was a part of the Ottoman Empire for almost 400 years. During that time, the Turkish Pound and several European currencies were circulating in Iraq at the same time. After World War I and the establishment of British jurisdiction, Iraq took on India’s monetary system and adopted the rupee as the country’s official currency. In 1931, the dinar became the official currency, and was linked to the British pound on an equal basis until 1959, when it became linked to the U.S. dollar, at a rate of 1 dinar to 2.8 dollars.
Post Gulf War
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After the Gulf War with the United States in 1991, the Iraqi government printed a large amount of new currency. This quickly devalued the dinar to the point that in 1995 the exchange rate was 3,000 dinars to 1 dollar. Saddam Hussein was overthrown in a second U.S. invasion in 2003, after which new banking laws were established. New bank notes and coins were issued using anti-forgery technology, and those with the old Iraqi dinars were allowed to exchange them for the new currency.
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Central Bank
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The Central Bank of Iraq (CBI) was established by law on March 6, 2004. The CBI provides many important functions for the Iraqi monetary system. The bank issues and manages the dinar and is in charge of implementing national exchange rate policies. The CBI holds, protects and manages the country’s gold reserves that back the dinar. The CBI regulates all of the banks in Iraq with the goal of maintaining stability in the financial system. As of July 2010, the CBI had branches in Basrah, Mosul, Sulaimaniyah and Erbil.
Iraqi Notes
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The Iraqi dinar comes in several different denomination notes. The Central Bank of Iraq issues paper notes in 50, 250, 500, 1,000, 5,000, 10,000 and 25,000 denominations. The notes picture historical figures as well as both ancient and modern landmarks. Security features have been added to the dinar to prevent counterfeiting. The bills have several advanced features such as a watermark, metallic ink, a built-in security thread, a color-changing symbol and an ultraviolet-activated section that glows to display the correct denomination.
Iraqi Coins
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Several different dinar coins were minted at various times in Iraq’s history, but the CBI has only issued three, as of July 2010. In 2004, the bank issued a 25-dinar copper-plated steel coin, a 50-dinar brass-plated steel coin, and a 100-dinar nickel-plated steel coin. The coins feature a simple map of Iraq on one side and the denomination and date on the other. The coins proved unpopular and were withdrawn from circulation.
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