Iraq: Money exchange continues without hiccups

Iraqpress ^ | 10/17/03 | Iraqpress

[Pikamax]

Money exchange continues without hiccups

Baghdad, Iraq Press, October 17, 2003 – The largest money exchange in Iraq's history is proceeding smoothly and no incident has been recorded in the 250 bank branches swapping former tattered banknotes for the new currency.

"Everything is proceeding according to plan. Our 1,250 staff involved in the exchange have reported no problems so far," Faleh Dawood Salman of the Iraq Central Bank said.

There are 80 exchange points in Baghdad alone, Salman said, adding that the bank was determined to complete the exchange by January 15 when old notes bearing the face of the ousted leader Saddam Hussein would be no more.

In the next three months the bank officials are expected to recycle four trillion dinars of the new currency carrying portraits of Hammurabi, an ancient Iraqi ruler and a Middle Ages Iraqi mathematician as well as archaeological landmarks.

"We are satisfied and pleased with the progress of the swap. The Iraqi people are aware of their interests and they realize the new dinar will contribute to economic stability and security," Salman said.

There were expectations that saboteurs and terrorists would try to undermine the exchange. There have been several suicide bomb attacks in Baghdad and lack of security is still a major problem facing both the US and local authorities.

Central Bank officials say the main hindrance occasionally delaying the exchange is the large quantities of fake notes in circulation.

The officials charged with administering the swap have instructions to reject faked dinars of the old regime but sometimes it is hard to identify them because most of the printing materials and machines were looted in the chaos that followed the fall of Baghdad to US troops on April 9.

Hours after the banks began the exchange, the dinar firmed slightly against the US dollar. It rose to 2040 from 2090 and traders expect it strengthened further once the money swap process is completed successfully.

Saddam Hussein began printing money locally after the United Nations sanctions were imposed on Iraq for his 1990 invasion of Kuwait and billions of banknotes were issued without anti-counterfeiting safeguards such as watermarks.

Older bills without Saddam's image continued to circulate in the north of Iraq but these also are being swamped for the new currency.

Meantime, Central Bank Governor Sinan Shabibi has said that privatization of the state-owned banking sector is under consideration and may take place soon.

Iraq's two government-controlled banks – al-Rafidain and al-Rasheed – hold about 90 percent of Iraqi deposits and Shabibi said he intends to open them up for private investors.