Al-Baiji: The new Iraqi currency is ready... and the law to remove zeros will reach parliament soon.
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The file of reforming the Iraqi currency has entered a more sensitive stage, after statements by the member of the Parliamentary Finance Committee, Mansour Al-Baiji, regarding the readiness of a new Iraqi currency, and the imminent arrival of the draft law to remove zeros to the House of Representatives for legislation and voting.
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According to what Al-Baiji said in a television interview, the government and the Central Bank of Iraq have completed some of the technical preparations related to the new currency, noting that the value of the currency that was prepared and printed amounts to about $250 million, and that its release into the market will be linked to the approval of the legal framework by the House of Representatives.
These statements come at a time when the issue of restructuring the Iraqi currency has returned to the forefront of economic discussion, after years of studies and proposals that addressed the project of removing three zeros from the dinar.
But the importance of the current development does not lie merely in issuing new banknotes, but rather in the mechanism that the state will adopt to move from the current currency to the new currency, which is the point that may determine the success of the process or turn it into a source of monetary instability if it is not managed carefully.
From an old project to a potential legislative decision
The idea of removing zeros is not new to Iraqi monetary policy. The Central Bank of Iraq published studies in the past outlining a plan to remove three zeros, explaining that the process is of an accounting and organizational nature, and does not automatically mean an increase in wealth or purchasing power for citizens.
Official data confirms that the Central Bank is the legally authorized entity to issue Iraqi currency, determine its denominations and designs, and make arrangements for its issuance.
Therefore, talk of a new currency must be separated from the concept of raising the value of the dinar.
Removing zeros, in essence, means changing the unit of account for the currency. If three zeros are removed, an amount of one million dinars might become one thousand new dinars, while the nominal economic value remains the same if the transaction is carried out at a fixed conversion rate.
This means that a citizen does not become richer simply by changing the shape of the numbers.
Why does the project need a law?
The transition from the old currency to a new currency on the scale of the Iraqi economy cannot be merely an administrative decision to issue new banknotes.
The state needs to determine the conversion rate, the dual circulation period, the mechanism for currency exchange, and address contracts, salaries, deposits, loans, prices, taxes, and accounting and banking systems.
Therefore, Al-Baiji's statements acquire political and economic importance, if true, regarding referring the law to remove zeros to parliament.
The scenario suggests that the government may adopt a transitional period of up to two years to replace the old money with the new.
Economically, the two-year period seems closer to a gradual reform model than a sudden replacement model, as it gives banks, companies and citizens time to adjust their systems, accounts, contracts and cash transactions.
$250 million... what does it mean?
The figure mentioned by the congressman, which is $250 million as the value of the printing, needs to be read carefully.
The value of printing in dollars does not mean that the state will add $250 million to its reserves, nor does it mean that the value of the dinar will jump against the dollar by a similar amount.
According to statements attributed to the deputy, it is a cost or value associated with the process of preparing and printing the new banknotes.
The economic value of a currency is determined primarily by monetary policy, fiscal policy, the size of liquidity, reserves, inflation, economic activity, and public confidence in the banking system.
Herein lies the most important point: the success of removing zeros is not measured by the appearance of the new banknote, but rather by the ability of the central bank and the government to maintain monetary stability during the transition phase.
The central bank faces its toughest test yet.
The official website of the Central Bank of Iraq currently displays the banknotes in circulation and the legal frameworks related to the currency. The law also confirms that the Central Bank is the entity responsible for issuing currency.
This makes the central bank the key player in any large-scale currency replacement process.
If the law is passed, he will have to define practically:
- The conversion rate between the two currencies.
- New currency denominations.
- Joint trading period.
- Authorized banks and exchange centers.
- Ceilings and mechanisms for replacing large sums of money.
- Anti-money laundering and counter-terrorism financing measures.
- The mechanism for dealing with cash funds located outside the banking system.
- A plan to withdraw the old currency from circulation.
- How to protect citizens from forgery and fraud.
The issue of large sums is of particular importance, especially since Al-Baiji’s statements spoke of a special mechanism for replacing old money, particularly large sums.
Why might two years be necessary?
If the new currency enters circulation, the biggest challenge will not be printing the paper, but managing the transition process.
Iraq has a highly cash-based economy, so withdrawing huge amounts of old dinars and replacing them with a new currency in a short period of time could create pressure on banks, exchange companies, and cash centers.
Adopting a transition period of up to two years could allow the process to be divided into stages.
From an economic standpoint, the state could begin by gradually introducing the new currency, while keeping the old currency valid for circulation for a specific period, then reducing its use until it is withdrawn completely.
However, the success of this mechanism depends on the transparency and clarity of the instructions for the public.
Removing zeros does not automatically mean an increase in the value of the dinar.
This point will be the most sensitive in the Iraqi market.
If, for example, the exchange rate before the removal of zeros reflected a certain value of the dinar against the dollar, then removing three zeros does not mean that the dinar has actually risen against the dollar.
The Central Bank of Iraq presented in its official data the price of the dollar at 1310 dinars per dollar in data published during 2026.
Therefore, renaming the monetary unit should not be confused with revaluing the currency.
The two decisions are completely different.
Removing zeros can make accounting, pricing, and financial data easier, but it does not by itself create new production, additional reserves, or an increase in purchasing power.
The real test: inflation and confidence
From a global economic perspective, currency reform succeeds when it is part of a broader program for financial and monetary stability.
However, if banknotes are changed without addressing inflation, budget deficits, or weak confidence in the banking system, the underlying problem will remain even if the numbers on the banknotes change.
Therefore, in the next phase, markets will be watching more than just the announcement of the new currency.
Fiscal policy will monitor the size of government spending, the growth of the money supply, foreign reserves, exchange rate stability, and the percentage of banking system use in payment transactions.
These indicators will be more important than the color or design of the banknote.
What does this mean for the citizen?
For the average citizen, the hypothetical scenario of removing zeros means that old money will not become worthless once the new currency is launched, provided a clear legal replacement mechanism is approved.
If the government adopts a two-year transition period as stated in the declarations, the replacement is expected to be gradual, in accordance with instructions issued by the competent authorities.
But citizens will need to be wary of the informal market, especially since any currency change usually creates a suitable environment for rumors and fraud, such as selling alleged banknotes as the “new currency” or claiming the existence of unofficial exchange rates.
Economic reading
If the law to remove zeros is indeed referred to the House of Representatives, then Iraq will have moved from the stage of study and discussion to the stage of possible legislation.
However, the process cannot be considered valid before the issuance of the law and official instructions from the competent authorities.
Here, a distinction must be made between three levels:
First: Printing or preparing new banknotes.
Second: Enacting a law that allows for the currency restructuring process.
Third: Actual implementation and currency exchange in the market.
Moving from level one to level three may take months or years, depending on the law and the timetable that the authorities will set.
The central bank itself, in the official pages we reviewed, did not publish any announcement specifying an official date for the removal of zeros or the launch of a new currency with these details. Furthermore, recent reports on the matter indicated that no implementation date has yet been announced.
A member of the Finance Committee reveals the arrival of the law to remove the zeros and change [the currency]
0:00
This law — the Stolen Funds Recovery Law — is specifically for this issue. This law will return all the amounts now.0:07
We also have, for example, the currency change law coming — removing three zeros. This will also burn the buried money.0:16
Wait, wait, wait, wait… right now you’re going to burn the episode, not just burn it — you’ll burn the whole studio!0:22
[Laughter]0:24
This is also because he can’t return, for example, 100 billion or 50 billion. There will also be controls in it. This is the “yellow limit” law, Your Excellency the sleeper… yes.0:32
I want you to focus carefully with me. [Laughter] In an in-depth interview, in a special interview with the Minister of Communications, Mr. Mustafa Sanad.0:41
Yes, he mentioned this topic — he opened this subject. Yes, there was a big fuss. Yes… where did you get this talk from? There is no removal of three zeros, there is no currency change. The law exists — the law is ready. And we had our meeting, I told you, with the Governor of the Central Bank. There are 250 million dollars — meaning the currency is ready — they just need to pass the law.1:04
Because the government doesn’t have the authority to remove the zeros; only the Council of Representatives (Parliament) does. They will send the law, prepare it. Possibly in the coming weeks the law to remove the zeros will come.1:13
On the contrary, this law means they are printing new currency. We have it ready — they have prepared it. And they have currency amounting to around 250 billion dollars without zeros. After that, once the law is passed, we will remove the three zeros. This law, first of all, the amounts… from the state, maybe within two years.1:30
This issue, and there will be a mechanism and controls. When the law reaches you… it might reach us from us, because the law at the beginning came to Finance, then the Speaker of the Council of Representatives said no, it has to go back to the government, and the government will send it to us. This law and the Borrowing Law… meaning… take it, al-Halbousi… no, no, we haven’t received it.1:47
No, no, I mean it was draft… it came to us in Finance, then we returned it — it and the Borrowing Law — we returned them to the government. The government will send them in an official letter to the Presidency.1:56
If the Borrowing Law and the Currency Change Law… currency change and the Stolen Funds Recovery Law — three laws. Three very important laws.
…will now reach the Parliament. They will reach the Parliament.
Furthermore, any future project related to restructuring currency denominations or removing zeros, should an official decision be made, will be subject to multiple legal, regulatory, and technical stages. Such a project will be announced, if approved, through the bank's official channels and various media outlets, along with a suitable transition period that allows citizens, banks, and institutions to exchange the currency safely and systematically, ensuring the full preservation of everyone's financial rights and obligations.
The Central Bank of Iraq urges citizens and media outlets to rely exclusively on its official statements and channels for information related to monetary policy and to refrain from relying on unverified news, figures, or information, as its dissemination may cause confusion or harm to citizens' financial interests.
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