Not my words but a good read.
Why Did They Need To Do This ?
FACT: Under Saddams Husseins regime there were never any accurate banking audits, since the Iran/Iraq war1980-1988. No One knew the true wealth of Iraq.
FACT: As of2001 Iraq’s world debt exceeded $200 billion U.S. dollars ( Because of United Nation sanctions, there was NO free trade with Iraq since 1991, although Iraq’s oil was traded on the “black market”, heavy borrowing was necessary to maintain Iraq.
FACT: Saddam Hussein printed the old Iraqi currency (a.k.a “Saddam Dinar”) of his “freewill” whenever he needed financing for his last three wars or his foreign personal accounts.
FACT: Completion of the International Monetary Funds *Article VIII, Sections 2, 3, and 4 of the IMF's Articles of Agreement (scheduled to be completed by mid2006) is a requirement and the primary goal of Sinan Al-Shibibi, the Chairman of The Central Bank of Iraqis to recognize the Iraqi Dinar as a world convertible currency in 2006.
*Scheduled to be Completed Mid 2006 - RTGS ( Real Time Gross Settlement ) with individual interbank payment obligations being settled across Exchange Settlement accounts held by each bank at the Reserve Bank.
**Scheduled to be Completed Mid 2006 - ACH (Automatic Clearing House) Commencement of payments clearing system between the headquarters of commercial banks and the CBI through the Automatic Clearing House (ACH).
***Already in Its 2nd Quarter Phase - Elimination of Government Oil Subsidies.
(QUOTE U.S. Senate Foreign Relations Committee Chairman Dick Lugar “Reducing the fuel subsidy will begin in later this month (December2005) when the price of gasoline will go from 5 cents to 13 cents a gallon and is supposed to increase to normal market price around $1.82 in2006”. source Richard G. Lugar, United States Senator for Indiana - Elevating the Iraq Debate and INDEX
NOTE* - Keep in mind that the Iraqi economy has been devastated to 1/485th of it pre war value. Yet the basic necessity that drives, production, manufacturing and delivery of goods for any nations economy (namely oil and gas) will increase 3600 percent in Iraq for 2006. ( from .05cents to $1.82 in one year)
2)Mid Term Range - Gulf Cooperation Council (GCC). Founded on May 26th 1981 consisting of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates have initiated membership for Iraq’s induction into the GCC.
What does this mean for the Iraqi Investor? (please read a,b,cbelow)
a) MANAMA, Sept 14 (KUNA) -- The Committee of Governors of Central Banks of GCC Countries, which met at the Bahraini capital Wednesday, approved the steps that were taken by members of the Gulf Cooperation Council in their effort to adopt a single currency by
b) BAHRAIN, (GULF DAILY NEWS) The GCC may have a common currency much earlier than the 2010 deadline, according to predictions by a top bank. Calyon Corporate and Investment Bank, part of the Credit Agricole Group, believes the GCC central banks have all the tools in place to let the project move ahead sooner than initially anticipated. "We believe that the GCC currency will be launched sooner than initially planned and that the Saudi Arabian Monetary Agency will take the lead because it is the best equipped bank to do so. It has all the supervisory tools in place," he said.
c) The Average currency value for these six GCC countries is $1.59 cents per unit of each countries currency. When a common currency is adopted for the GCC region, Iraq will have to be valued in this average, with plans to implement the GCC unified currency as early as 2007. But before this will happen Iraq must show the GCC that they can support its own currency value, thus revaluing their Iraqi Dinar is a mandatory pre-requisite.
The New Iraqi Dinar consists of 7 new denomination notes, the 50, 250, 500, 1000, 5000, 10000,25000, leaving room for the pre war ¼ dinar,½ dinar, 1, 5, 10 & 25 dinar notes which have yet to be circulated because they would currently have ZERO value. This currency is 100% legal to own, sell, trade and is encouraged by the Central Bank or Iraq.
Why are there large denominations ?
Oil rich countries in the past were common to have large denominational notes. For Iraq there is more prevalent reason. Since the 1990 U.N sanctions, Iraq has been a cash based economy. With the vast amount of reconstruction finances immediately needed to rebuild Iraq’s infrastructure, their largest currency note being the 25,000 dinar necessitates a significant revaluation to be needed from its present approximate dollar value of $20.00.In simpler terms, even to make a large purchase such as a car for example an Iraqi would need 2000 of the largest denominational notes. In time, after the IQD’s convertibility the larger dinar notes will be drawn out of circulation at a point when they are returned to the Central Bank of Iraq, which then, will be intended for interbank transactions, much like the history of the USA $500, $1,000, $5,000 & $10,000 that were also eventually removed from circulation.
You’ve seen and will see me mention the word revalue or revaluation several times in this letter. I’m implying to the future value of the Iraqi currency that was de-valued prior to the 2001conflict. I’d like to point out, that before 2001 many Iraqi professionals such as doctors, lawyers, teachers & business professionals alike, who were earning 300,000 Iraqi dinar, held a U.S. dollar equivalent worth of $93,000. Not much by today’s standards, but just imagine, that almost overnight in 2001, their 300,000 dinar was worth $239.00. A revaluation from the artificially imposed IMF rate of 1460:1 has already increased with the limited central banks instruments at their disposal and is an inevitable fact that the dinar will substantially increase when traded in a global economy.
Kuwait
20 Dinar was $2.00 USD 20 Dinar is NOW $68.00 USD
Oman
50 Dinar was $82.00 USD 50 Dinar is NOW $130.0 USD
Bahrain
20 Dinar was $27.00 USD 20 Dinar is NOW $54.00 USD
Jordan
50 Dinar was $55.00 USD 50 Dinar is NOW $70.00 USD
Iraq
50 Dinar was $161.0 USD 50 Dinar is NOW $00.04 USD
And yet it’s true that these countries are based on a 1,000 unit system, meaning the USA has 100 pennies to the dollar, mid east currencies are based on 1,000 fils (coins) equivalent to ONE dinar. All mid east countries have the ¼dinar, ½ dinar, 1,5, 10 & 25. (coins & notes) Iraq also used fil coins before the war, but for Iraq to have these lower denominations NOW serves NO feasible economic purpose but will allow Iraq to fill the “currency void” when the dinar is revalued.
Interesting enough?
