More CBI Highlights ~ The Last Time Iraq RV’d Its Currency

[phlip]

When the current CBI was founded under the authority of the Coalition Provisional Authority (CPA), L. Paul Bremer was the Administrator in charge of the CPA and he kept himself busy by issuing CPA Orders ~ to be followed by the folks under his authority.

 

One such order had to do with the CBI and with Iraq’s last currency redenomination (RD)/revalue (RV) which took place during a Conversion Period between 14 October, 2003 and 15 January, 2004 ~ roughly a 90 day period. This particular order was called Coalition Provisional Authority Order Number 43 which Bremer signed into force on 14 October, 2003. A copy of it can be found at this link:

http://www.casi.org.uk/info/cpa/20031015_CPAORD43.pdf

 

It’s my opinion that anyone currently invested in the Iraqi Dinar (IQD) would be best served by reading the entire 4 page (widely spaced) document at least once in order to familiarize themselves with what actually happened the last time Iraq RD/RV’d its currency.

It might just help to cut out some of the wide spread speculation regarding the actual mechanics of another such IQD RD/RV ~ which may or may not happen very soon.

In keeping with the theme of highlights, here are some excerpts from CPA Order #43:

 

Understanding that there is an urgent economic need for the issuance of banknotes that will instill public confidence and facilitate the use of money for its traditional purposes;

 

“New Iraqi dinar” means the new series of Iraqi dinar banknotes that are issued by the CBI after the date that this order enters into force.

 

“1990 dinar” means banknotes issued by the CBI from 1990 up to and including the date that this order enters into force.

 

“Swiss dinar” means banknotes and coins issued by the CBI from 1959 up to and including 1989.

 

The CBI shall be responsible for the exchange of Iraqi dinar banknotes currently circulating in Iraq and may issue Administration Instructions consistent with this order, for the purpose of implementing and facilitating the issuance of the New Iraqi dinar and the currency change.

 

New Iraqi dinars shall be legal tender within Iraq, effective on the first day of the Conversion Period.

 

The exchange of currently circulating 1990 dinar banknotes and Swiss dinar banknotes and coins against New Iraqi dinar banknotes shall take place during the Conversion Period by exchanges at the Official Conversion Rates, free of charge, at the offices of the CBI and banks and other institutions designated by the CBI.

 

The 1990 dinar banknotes and the Swiss banknotes and coins shall be exchanged against New Iraqi dinar banknotes at the official conversion rates of one (1) 1990 dinar to one (1) New Iraqi dinar and of one (1) Swiss dinar to one-hundred-and-fifty (150) New Iraqi dinars.

 

During the conversion period, 1990 dinar banknotes, Swiss dinar banknotes and coins and New Iraqi banknotes shall all be legal tender banknotes in Iraq and each type of Iraqi dinar may be used as such in proportion to its Official Conversion Rate.

 

After January 15, 2004 only New Iraqi dinar banknotes issued by the CBI shall be legal tender banknotes.

 

Effective January 16, 2004, all references in legal instruments to the Swiss dinar shall be converted by law to the New Iraqi dinar.

 

OK, with that said, a few more descriptions for clarification might be in order:

 

The New Iraqi dinar banknotes indicated in the order are printed in England and, of course, are the same ones that are circulating currently in Iraq today. They come in denominations of 50, 250, 500, 1000, 5000, 10,000, and 25,000.

Curiously, they share a feature with the currently circulating Swiss Franc ~ both have images on them relating to Iraq’s Ancient Sumerian past history.

The term Anunnaki in the Ancient Sumerian language literally means “Those who from the heavens came” and refers to a very tall race of beings that the Ancient Sumerians considered to be gods descended from heaven.

In this image: Iraqi Dinari we can see that the same image of a seated Anunnaki that is depicted on an Ancient Sumerian pictograph is also on the reverse side of a 25,000 banknote.

In this image: Swiss Franc not only are the Anunnaki on the Swiss franc, the entry and exit of Planet X (referred to in Ancient Sumer as Nibiru) from our solar system and the relationship to the Earth's orbit are also shown.

Although, coins in denominations of 25 and 100 are also indicated on the CBI website they are not mentioned in CPA Order #43 regarding the New Iraqi dinar.

These New Iraqi dinar are not accepted anywhere outside of Iraq, but as per CPA Order #43 are considered legal tender for all debts public and private within the borders of Iraq.

 

The 1990 banknotes indicated in the order refers to the ones which for the most part had Saddam’s picture on them, were printed locally, and were considered legal tender for all debts public and private within the borders of Iraq only.

These Saddam banknotes were printed in denominations of ¼, ½, 1, 5, 10, 25, 100, 250 and 10,000. Because of UN sanctions they were never accepted anywhere outside of Iraq. Instead, Saddam used the USD, or the Euro, or the British pound or the Swiss franc for international purchases and payments of debts and for the sale of oil.

 

The Swiss dinar banknotes and coins indicated in the order got their name because the plates were made in Switzerland; however, the notes were mostly printed in England. They came in denominations of ¼, ½, 1, 5, 10 and 25. These banknotes were accepted internationally and were initially pegged to the British pound at par up until 1959, when without changing value, they were pegged to the USD at 1 dinar = $2.80.

Even when UN sanctions ostensibly made these Swiss dinars unacceptable internationally in 1989, the Kurds in the north continued to use them (only) without accepting or using the Saddam dinars. Because the Kurds didn’t have the Swiss plates for reprinting, the supply of these Swiss dinars remained the same or decreased because of use and therefore they appreciated in value against the Saddam dinar.   

 

In order to determine what might happen during Iraq’s next RD/RV a person could do a comparative study of the conditions that existed during the CPA Order #43 Conversion Period with the conditions that exist for the Iraqi dinar (IQD) currency today.

 

For example, back then there were 3 different currencies to deal with (New Iraqi dinar, 1990 Iraqi dinar and Swiss Iraqi dinar) just as there are (potentially) 3 different currencies to deal with now (High denomination IQD, low denomination IQD and the USD).

 

Back then the 2 currencies that were accepted only within the borders of Iraq (the New Iraqi dinar and the 1990 Iraqi dinar) were exchanged at par or 1 to 1 within Iraq and without any gain or loss for any Iraqi Citizen. The 90 day Conversion Period appeared to be enough time for the exchange and possibly because there was no speculating on official conversion rates.

Today, the CBI and the Ministry of Finance (MOF) have already gone on record numerous times to emphasize the idea that when they finally get around to a Conversion Period to exchange high denomination IQD banknotes for low denomination IQD banknotes and coins within Iraq it will be done with no loss or gain for any Iraqi Citizen.

That seems to translate to a neutral event with regard to the value of currency and coins, electronic accounts and stock shares.  

 

Furthermore, both the CBI and the MOF have emphasized that during the Conversion Period both the high denomination IQD banknotes and coins and the low denomination IQD banknotes and coins would be allowed to co-exist in circulation and both could be used as legal tender in proportion to their official conversion rates.

   

Back then, since the Swiss dinar continued to be used by the Kurds even after it was disendorsed by the CBI as legal tender inside Iraq, a person could assume that possibly it was still accepted internationally (albeit on a very limited scale due to UN sanctions) since the Kurds did do business autonomously outside of their own borders; and because of that, the Swiss dinar could be compared to the USD of today insofar as the Swiss dinar was the only IQD ever accepted internationally and the USD is now the de-facto international currency of Iraq today.

Back then the Swiss dinar had a conversion rate value above 1 to 1 (par) with the circulating Saddam dinar inside Iraq, just as the USD has value above par against the New Iraqi dinar today.

 

That being the case, any Conversion Period which allowed the co-existence of currencies and allowed their use in proportion to their official conversion rates inside Iraq would have to also include the USD ~ at least at CBI designated institutions inside Iraq.

 

The CBI of today is already an old hand at this RD/RV stuff and it’s hard to imagine that the Executive Board would try to reinvent the wheel by conducting another RD/RV much differently than they did the last time.

Last time there was a simultaneous RD (from the Saddam Iraqi dinar to the New Iraqi dinar) and RV (with the New Iraqi dinar against the Swiss dinar).

 

This next time around, there might also be a simultaneous RD (from the high denomination IDQ to the low denomination IDQ) and RV (with the low denomination IQD against the USD).

 

The Official Conversion Period and the Official Conversion Rates will, of course, be up to the CBI; but whatever they do will also have to be acceptable to both the Iraqi Citizens and to the rest of the international community or it simply won’t work.

 

For instance, whatever Official Conversion Rate that the CBI designates for the “new” lower denomination IQD banknotes and coins against the USD will simultaneously have to encourage Iraqi Citizens to de-dollarize inside Iraq, as well as convince Iraqi businesses, their international partners and the MOF that the rate will support expeditious exportation of Iraq’s main revenue resources.

 

In other words, if the “new” lower denomination IQD rate against the USD is too high, then Iraqi oil becomes too expensive and international oil companies will shop elsewhere for their go juice.

At the same time, if the “new” lower denomination IQD rate against the USD is too low, then Iraq will end up irritating its neighbors and competitors.

 

As an example, China is currently irritating most of the world by keeping its Yuan Renmembi currency rate artificially low against other major exporter’s currencies and thereby making its own exports the go to bargain; but Iraq can ill afford to irritate anybody right now.

 

 

[jeepguy]

heyyyy   thanks for the currency brake down i have wondered if this has happened , in the past, as to what iraq has done too over come the old saddam notes and new notes , and what happened  too the coinage in the same era......  i just hope if they do any of the above we do not have too jump a flight to iraq to cash -in  these notes we hold now...  i like a vaction , but not one that has a beach and no water front