* CaptnJerry (Re-denomination… A very real possibility and it’s nothing to be afraid of!): OOM 1/26/12
I am starting this thread to educate all the dinar holders here on the possibility of the re-denomination of the Iraqi currency and that it’s nothing to fear. But wait before you get all upset, try to forget all of the doom and gloom that has been presented by “those who shall remain nameless” when describing this process and look at some facts.
If you follow the new articles/press releases (not the opinion pieces) Iraq has always described a redenomination/lop. “Those who shall remain namless” are the only ones saying that it won’t Redenominate/LOP. Iraq has stated that the income of the people would not change, but the currency would have more buying power. Iraq has stated with the razing of the 000′s that 200,000 old dinar will equal 200 new dinar, 100,000 OD will equal 100 ND, 250 OD = .25 ND, 50 OD = .05 ND… According to the examples Iraq has given, the razing of the 000′s will effect the currency and by default the exchange rate (.00085 – $1 becomes .85 – $1). If it continues to go the way Iraq has always said it will go, we are at best looking at a possible breaking even with a 1-1 exchange rate, depending on when you bought your dinar (what rate you paid for your dinar). The new dinar or lower demons, are supposed to be replacing the old denoms. The two will coexist in circulation for 2-4 years, but possessors will have up to 10 years to exchange before being retired and becoming worthless.
Why would Iraq re-denominate their currency?
In times of inflation, the same number of monetary units have continually decreasing purchasing power. In other words, prices of products and services must be expressed in higher numbers. If these numbers become excessively large, they can impede daily transactions because of the risk and inconvenience of carrying stacks of bills, or the strain on systems, e.g. automatic teller machines (ATMs), or because human psychology does not handle large numbers well. The authorities may alleviate this problem by redenomination: a new unit replaces the old unit with a fixed number of old units being converted to 1 new unit. If inflation is the reason for redenomination, this ratio is much larger than 1, usually a positive integral power of 10 like 100, 1000 or 1 million, and the procedure can be referred to as “cutting zeroes”.
Here are 2 examples
1. Brazil,
On February 3, 2010, the Central Bank of Brazil announced a new series of the real banknotes which would begin to be released in April 2010. The new design will add security enhancements which aim to reduce counterfeiting. The notes will have different sizes according to their values to help vision-impaired people. The changes were made reflecting the growth of the Brazilian economy and the need for a stronger and safer currency. The new banknotes have begun to enter circulation in December 2010, coexisting with the older ones.
2. Romania,
If we read the history of the process of the removal of the zeros in Romania we can see where they did the same thing, where there was not a time limit to exchange the old for the new leu. Please see the below link for an article from July 1, 2005 when they implemented the Romania process to remove 4 zeros from their currency. This was a 10,000:1 redenomination, as opposed to the 1000:1 that the CBI has been stating they want to do.
http://www.rferl.org/content/article/1059616.html
Please note in there the same verbage we read today similar to the process of deleting 3 zeros from the Dinar.
Now, here is the key thing to note though, please see the link below, and on page 1 they talk about how the prices would work for the 2 different notes that will be in circulation and could be used from July 2005 through June 2006. here is the verbage and the link: “Implementation of the new currency shall be made according to the following schedule: – July 1, 2005: introduction of the new leu (RON). All account balances, credit and debit, shall be converted to RON and all banking transfers, accounting documents and supporting payment instruments, starting on this date, shall be performed and drawn up only in RON; – July 1, 2005 – June 30, 2006: double posting of prices, both in old and new leu, including forex exchange rates. The exchange rates shall be expressed with four decimals, without any rounding; December 31, 2006: Until this date both the old and new leu shall be accepted for cash payments. There is no time limit for exchanging ROL notes and coins for RON notes and coins at the National Bank of Romania branches performing cash operations and at the credit institutions authorised to perform such operations by order of the National Bank of Romania Governor (para 4, article 2 of Law no. 348/2004 as amended).
The * CaptnJerry (Re-denomination… A very real possibility and it’s nothing to be afraid of!): OOM 1/26/12 by Dinar Daddy's Tidbits, unless otherwise expressly stated, is licensed under a Creative Commons Attribution-ShareAlike 3.0 Unported License.
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