My FX Buddies: Iraq’s Central Bank Finally Speaks? Removing Zeros Is Under Discussion

The Central Bank of Iraq is discussing removing zeros from the dinar.

Al-Mustaqilla reveals: Removing zeros from the Iraqi dinar is under discussion within the Central Bank.

his just came out it might be the closest we get to info from the CBI hahaha

it's dated aug 19 2026

August 19, 2026Last updated: August 19, 2026

The eyes of economic and banking circles in Iraq are turning to the Central Bank of Iraq, amid information about internal discussions regarding the project to remove zeros from the Iraqi dinar and modernize the currency and the monetary and banking system, in a step that, if the decision is made to proceed with it, will be one of the biggest monetary transformations in the history of modern Iraq.

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According to an informed source who spoke to Al-Mustaqilla, the issue of removing zeros is still under discussion within the Central Bank, and has not yet turned into a final binding decision, while a number of scenarios are being discussed regarding the future of the Iraqi currency and the mechanism for transitioning to the new monetary system.

The source indicates that the Central Bank is preparing to issue a statement or clarification soon explaining its direction regarding the project, and whether it will proceed with changing the currency, or will be content with updating the banking and monetary system while keeping the current currency.

Between removing zeros and changing the value of the dinar

Economically, there is a fundamental difference between removing zeros and raising the value of the Iraqi dinar.

Removing zeros is essentially a process of renaming a currency, converting large nominal values into smaller monetary units. For example, if three zeros are removed, 1,000 dinars might become one dinar of the new currency, with a similar conversion occurring in prices, wages, deposits, debts, and contracts.

This means that removing zeros does not in itself create new wealth or increase the purchasing power of the citizen.

Raising the value of the dinar against the dollar is a different decision that is linked to monetary policy, the size of foreign reserves, financial balance, trade balance, domestic liquidity, and the central bank’s ability to defend the exchange rate.

Therefore, any serious economic discussion about the project should not confuse the two terms.

Why is Iraq considering removing zeros?

The Iraqi monetary system suffers from inflation in the nominal value of money as a result of decades of accumulated inflation and exchange rate changes.

The presence of banknotes in high denominations, along with transactions amounting to millions and billions of dinars, raises the cost of counting, storing, transporting, and accounting settlement, and increases the need for more advanced electronic systems to manage payments.

From an accounting and banking perspective, restructuring currency denominations can contribute to:

Simplifying daily transactions.
Facilitating accounting and the preparation of financial statements.
Reducing the size of numbers in banking systems.
Improving the efficiency of payment and settlement processes.
Facilitating the transition to an economy more reliant on electronic payments.
Reducing some of the costs associated with printing, transporting, and managing cash.

But the success of this step does not depend solely on changing banknotes, but rather on a comprehensive reform of the monetary and banking system.

The central bank faces a sensitive decision.

Information obtained by “Al-Mustaqila” indicates that the discussion is not only about printing a new currency, but also about the formula through which the transition from the current system to a more efficient monetary system can be made.

Here a number of fundamental economic questions arise:

Will the zeros be removed while keeping the real value of the dinar unchanged?

Will there be a comprehensive repricing of goods and services?

How will bank deposits and loans be processed?

How will the salaries of employees and retirees be transferred?

What will happen to commercial, real estate, and investment contracts?

And how will cash outside the banking system be dealt with?

These details will be more important than the shape of the new currency itself.

Parliament enters the equation

If the central bank decides to officially proceed with changing the currency or redefining its monetary units, the project will need a clear legal framework.

According to the source, there is a discussion about preparing a draft law that can be submitted to the House of Representatives if the Central Bank makes an official decision to proceed with the project.

This means that if the file moves from the study phase to implementation, it will not be a technical decision related to the central bank alone, but will become a broad national project that requires coordination between the central bank, the government, parliament, the banking sector and financial institutions.

The most dangerous factor: currency circulating outside banks

One of the most difficult issues any project to remove zeros will face is the amount of cash outside the banking system.

The success of the currency restructuring process requires accurate knowledge of the volume of cash in circulation, the mechanisms for replacing old banknotes, the dual circulation period between the old and new currency, and the mechanisms for combating money laundering and the introduction of illicit funds into the banking system.

Therefore, if the project is adopted, it will be an opportunity to reorganize the movement of money within the economy, but at the same time it carries great risks if the replacement process is not governed by precise and transparent procedures.

What about the dollar?

The Iraqi economy is characterized by a high degree of dollarization, as the dollar is used in part of transactions, savings, trade and real estate, in addition to the dinar's exchange rate being linked to the central bank's monetary policy.

Therefore, changing the shape of the dinar without addressing the reasons for the preference for the dollar may not, on its own, lead to increased confidence in the local currency.

Confidence in the dinar is ultimately linked to deeper factors, most notably:

Exchange rate stability, inflation control, strong foreign reserves, fiscal discipline, sound banking system, and economic policy stability.

Possible economic scenarios

The future of the project can be read through three main scenarios:

The first scenario involves modernizing the banking system without changing the currency.
This scenario entails focusing on electronic payments, reforming banks, upgrading banking systems, and improving liquidity management, while maintaining the current dinar in circulation.

The second option is to remove zeros while maintaining the real value of the dinar.
In this case, the currency unit, denominations, and nominal numbers are changed, but the process itself is not considered a true revaluation of the dinar's exchange rate.

Third: Removing zeros in conjunction with a broad monetary and banking reform.
This scenario is the most complex, as it requires restructuring exchange rates, liquidity management, banking systems, prices, wages, contracts, and debt, along with a widespread public awareness campaign.

The real challenge is not the banknote.

Economically, a new currency can be printed within a limited period, but rebuilding confidence in the currency takes years.

If three zeros are removed, for example, a citizen who had 10 million dinars will have 10,000 units of the new currency according to the same conversion rate; that is, the calculation changes, but the real economic value does not change simply by removing the zeros.

Therefore, talking about removing zeros as a direct means of "raising the value of the dinar" requires economic scrutiny.

A strong currency is not made by small denominations of currency, but by a strong economy, a stable monetary policy, and reliable financial institutions.

What is the market waiting for?

The Iraqi market is awaiting what the Central Bank will issue in the coming period.

Any official announcement must clearly answer several questions: the implementation date, the conversion rate, the new categories, the dual trading period, the currency exchange mechanism, the status of deposits and loans, exchange rates, the fate of contracts and salaries, and legal guarantees for citizens and companies.

A clear official message will also be important to prevent speculation and rumors that could exploit any inaccurate talk about a "new currency" or a "sudden increase in the value of the dinar".

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