Use of US Dollar to Be Eliminated in Iraq

13th Sustainment Command (Expeditionary)
Story by Spc. Lisa A. Cope
Date: 01.30.2010
Posted: 01.30.2010 07:53

CONTINGENCY OPERATING LOCATION BASRA, Iraq – United States currency may soon become difficult to find in Iraq as part of an effort to protect Soldiers and increase the value of the Iraqi dinar.

Sgt. Brittany A. Raimer, a dispersing manager with the 368th Finance Management Company, out of Wichita, Kan., 36th Sustainment Brigade, 13th Sustainment Command (Expeditionary), said eliminating the use of U.S. currency on the battlefield will help to stimulate the economy of Iraq.

“One of the main focuses of finance is to ultimately eliminate U.S. currency from the battlefield,” said Raimer, a Lake Charles, La., native. “Our government is implementing the use of the Iraqi dinar, to both undermine the dependency the Iraqi nationals have on American currency and to back the Dinar, greatly increasing its weight on the market.”

The use of electronic fund transfers to pay vendors and contractors, and urging service members to rely on the Eagle Cash Card, rather than cash, are two major changes that have been implemented in Iraq to eliminate the use of cash, said Raimer.

“The Eagle Cash Card enables personnel to have a direct link to the bank account without the hassle of hard cash,” said Raimer. “The stored value card has been instrumental in effectively moving toward a cashless battlefield.”

Sgt. Toni M. Guillery, a dispersing agent with the 368th FM Company and a Lake Charles, La., native, said the Eagle Cash Card is designed to help prevent service members from losing money or being robbed while in country.

“Carrying a single card is better than carrying a wad of money in your pocket, but one concern that I do have is … on the kiosks, you have to use a pin number in order to access the money, but when you go to vendors, you do not,” said Guillery. “If you [fill the card] up to the max, and you lose that card, and somebody picks it up and finds it and they are a dishonest person, they can go and spend that money.”

Guillery said the unit only disburses U.S. cash to service members who are about to go on mid-tour leave or re-deploy.

Guillery said the unit disburses less than $10,000 in U.S. cash per month, but disburses more than ع.د351,000,000 (IQD), the equivalent of roughly $300,000, per month.

The current exchange rate is ع.د1,170 to $1, said Guillery.

Raimer said the transition away from the U.S. dollar has aided the progression of the banking industry in Iraq.

Raimer said, “The progression [away from U.S. currency] has greatly supported the modernization of the banking system, thus improving and instilling trust in the local economy.”

 

Iraq Planning Currency Redenomination

Iraqi dinars are stacked at a teller’s window in a Najaf bank.
February 06, 2010
BAGHDAD — The Iraqi Central Bank is planning to redenominate the national currency in an effort to ease transactions and allow people to carry less paper money, RFE/RL’s Radio Free Iraq (RFI) reports.

Mudhhir Muhammad Salih, a member of a Central Bank advisory panel, told RFI that a plan has been made to remove three zeros from the currency and phase out the current banknotes late this year.

Salih said by the end of 2010 the new banknotes will be fully introduced while the old banknotes will be gradually removed from circulation. He did not specify when the new notes would be issued.

Both will be legal tender in Iraq until the old notes are completely withdrawn.

Iraqi officials have had a long-running plan to redenominate the Iraqi dinar. In 2006, the Finance Ministry recommended to the Central Bank that it carry out such a plan.

Salih pointed out that banks are having a hard time accepting cash savings and deposits, but by dropping the zeros it will make it easier for both the banks to deal with their customers and for the general public to carry money. He said some 80 percent of Iraq’s money supply is cash in circulation.

Salih added that in 1990 the value of banknotes in circulation was about 25 billion Iraqi dinars but is currently some 25 trillion dinars.

Economic analyst Hilal al-Tahhan told RFI that the bank’s move is overdue. He said he expects the currency change to go smoothly because of the decision to allow both the old and new banknotes to coexist, leading to less turbulence in the economy.

The current exchange rate is 1,167 Iraqi dinars to the U.S. dollar.