Swiss dinar
Encyclopedia
Swiss dinar is a term used to describe the Iraq
i currency in circulation prior to the 1990 Gulf War with the Coalition Forces. The reason for the adjective "Swiss" is unknown, but there are two possible explanations. The first is that the printing plates
for the currency came from Switzerland
, although the notes were actually printed in the United Kingdom
. After the war, subject to economic sanctions authorised by United Nations
resolutions, continued importing of the "Swiss" notes was prohibited, and the Central Bank of Iraq began domestic printing of a new Iraqi dinar
. The second possible explanation is that prior to the Gulf War, Iraq was historically a low inflation country, similar to Switzerland.
. However, the old currency still circulated in the politically isolated Kurd
ish regions of Iraq. The government of the Kurdish region did not have the printing plates of the Swiss Dinar, but it also refused to accept lower-quality Saddam notes (which were issued in huge amounts). Since the supply of Saddam notes increased while the supply of Swiss dinar notes remained stagnant (even decreased because of torn notes), the Swiss dinar appreciated against the Saddam note. By having its own stable currency, the northern part of Iraq effectively evaded inflation, which ran rampant throughout the rest of the nation .
, installed by the Coalition Forces, determined that Iraq needed a new, unified currency, but establishing a proper exchange rate was relatively difficult. The market exchange rate for Saddam to Swiss dinars remained around 100:1 from 1998 to January 2002, but as the invasion ensued, the Kurdish currency appreciated to 300:1, and subsequently fell to 250:1. After further investigation, the Coalition Provisional Authority determined that it would be best to equate the two currencies by Purchasing Power Parity
, which was around 100:1. After researching further, the Coalition decided to adopt an official rate
between the market rate and the PPP
rate, officially pegging the currency at 150 Saddam dinars per Swiss dinar.
There were two proposed methods to unify the currencies. The first would be to print a new set of Swiss dinar notes and distribute them among the south. However, this would result in 80% of the population needing to exchange the Saddam notes for Swiss dinars. Since printing more Saddam notes was not politically favored, after consulting with a currency expert, the Coalition decided to alter the Swiss plates to the Saddam denominations
. This would allow the least amount of currency exchange, but also take Saddam's photo off the currency. The new Swiss currency was created in a different color to differentiate from the old currency.
Reportedly, the exchange was relatively swift and without incident, with the exception of two failed attacks on currency envoys .
Iraq
Iraq ; officially the Republic of Iraq is a country in Western Asia spanning most of the northwestern end of the Zagros mountain range, the eastern part of the Syrian Desert and the northern part of the Arabian Desert....
i currency in circulation prior to the 1990 Gulf War with the Coalition Forces. The reason for the adjective "Swiss" is unknown, but there are two possible explanations. The first is that the printing plates
Lithography
Lithography is a method for printing using a stone or a metal plate with a completely smooth surface...
for the currency came from Switzerland
Switzerland
Switzerland name of one of the Swiss cantons. ; ; ; or ), in its full name the Swiss Confederation , is a federal republic consisting of 26 cantons, with Bern as the seat of the federal authorities. The country is situated in Western Europe,Or Central Europe depending on the definition....
, although the notes were actually printed in the United Kingdom
United Kingdom
The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...
. After the war, subject to economic sanctions authorised by United Nations
United Nations
The United Nations is an international organization whose stated aims are facilitating cooperation in international law, international security, economic development, social progress, human rights, and achievement of world peace...
resolutions, continued importing of the "Swiss" notes was prohibited, and the Central Bank of Iraq began domestic printing of a new Iraqi dinar
Iraqi dinar
The dinar is the currency of Iraq. It is issued by the Central Bank of Iraq and is subdivided into 1,000 fils , although inflation has rendered the fils obsolete.-History:...
. The second possible explanation is that prior to the Gulf War, Iraq was historically a low inflation country, similar to Switzerland.
Inter-war period
After the Gulf War, the Iraqi government disendorsed the old currency, favoring newly printed Saddam dinars, and the Swiss dinar ceased to be legal tenderLegal tender
Legal tender is a medium of payment allowed by law or recognized by a legal system to be valid for meeting a financial obligation. Paper currency is a common form of legal tender in many countries....
. However, the old currency still circulated in the politically isolated Kurd
Kürd
Kürd or Kyurd or Kyurt may refer to:*Kürd Eldarbəyli, Azerbaijan*Kürd Mahrızlı, Azerbaijan*Kürd, Goychay, Azerbaijan*Kürd, Jalilabad, Azerbaijan*Kürd, Qabala, Azerbaijan*Qurdbayram, Azerbaijan...
ish regions of Iraq. The government of the Kurdish region did not have the printing plates of the Swiss Dinar, but it also refused to accept lower-quality Saddam notes (which were issued in huge amounts). Since the supply of Saddam notes increased while the supply of Swiss dinar notes remained stagnant (even decreased because of torn notes), the Swiss dinar appreciated against the Saddam note. By having its own stable currency, the northern part of Iraq effectively evaded inflation, which ran rampant throughout the rest of the nation .
Post war
Following the 2003 invasion the Coalition Provisional AuthorityCoalition Provisional Authority
The Coalition Provisional Authority was established as a transitional government following the invasion of Iraq by the United States and its allies, members of the Multi-National Force – Iraq which was formed to oust the government of Saddam Hussein in 2003...
, installed by the Coalition Forces, determined that Iraq needed a new, unified currency, but establishing a proper exchange rate was relatively difficult. The market exchange rate for Saddam to Swiss dinars remained around 100:1 from 1998 to January 2002, but as the invasion ensued, the Kurdish currency appreciated to 300:1, and subsequently fell to 250:1. After further investigation, the Coalition Provisional Authority determined that it would be best to equate the two currencies by Purchasing Power Parity
Purchasing power parity
In economics, purchasing power parity is a condition between countries where an amount of money has the same purchasing power in different countries. The prices of the goods between the countries would only reflect the exchange rates...
, which was around 100:1. After researching further, the Coalition decided to adopt an official rate
Fixed exchange rate
A fixed exchange rate, sometimes called a pegged exchange rate, is a type of exchange rate regime wherein a currency's value is matched to the value of another single currency or to a basket of other currencies, or to another measure of value, such as gold.A fixed exchange rate is usually used to...
between the market rate and the PPP
Purchasing power parity
In economics, purchasing power parity is a condition between countries where an amount of money has the same purchasing power in different countries. The prices of the goods between the countries would only reflect the exchange rates...
rate, officially pegging the currency at 150 Saddam dinars per Swiss dinar.
There were two proposed methods to unify the currencies. The first would be to print a new set of Swiss dinar notes and distribute them among the south. However, this would result in 80% of the population needing to exchange the Saddam notes for Swiss dinars. Since printing more Saddam notes was not politically favored, after consulting with a currency expert, the Coalition decided to alter the Swiss plates to the Saddam denominations
Denomination (currency)
Denomination is a proper description of a currency amount, usually for coins or banknotes. Denominations may also be used with other means of payment like gift cards. See also Redenomination.-Subunit and super unit:...
. This would allow the least amount of currency exchange, but also take Saddam's photo off the currency. The new Swiss currency was created in a different color to differentiate from the old currency.
Reportedly, the exchange was relatively swift and without incident, with the exception of two failed attacks on currency envoys .