Deleting 3 zeros from the currency … Parliamentary finance is suspended and determines the size of the cost and the economic effects
Recently, a proposal to delete 3 zeros from the Iraqi currency has been put forward to provide cash value in the Iraqi market in order to face the financial crisis, which has abounded proposals aimed at reducing its effects, especially with regard to low oil prices and the lack of liquidity in the state to finance basic salaries and expenses.
The reporter of the Parliamentary Finance Committee, Ahmed Al-Saffar, said in an interview with (Baghdad Today), “Deleting zeros from the currency does not affect financially and does not get the country out of the crisis, and it is only a psychological aspect.”
He added, “Deleting zeros will affect the government because it will destroy the currency it has and issue a new currency without zeros, and this will be in printing houses outside the country and this will cost the government a lot, and the current time is not suitable for this procedure.”
As for a member of the Finance Committee, Ahmed Hama, he told (Baghdad Today), “Exiting the financial crisis is not only by deleting zeros from the Iraqi currency because the crisis is mainly economic,” indicating that “deleting zeros from the Iraqi dinar needs to print a new currency.”
He pointed out that “the cost of printing a new currency of different denominations of cash amounts to 60 trillion dinars, and this is difficult for Iraq to bear at the present time, because each denomination or every banknote of the currency requires 6 cents to be issued again.”
The Iraqi economist Khalifa Al-Zubaidi says in an article that deleting zeros from the local currency is the process of replacing the old currency with a new one whose price is less than the old currency by the number of zeros that will be deleted. For example, deleting three zeros from the Iraqi currency means that one dinar from the new currency is equivalent to 1000 dinars from Old currency.”
He adds, “The idea of deleting zeros from the local currency began after the First World War. In 1923, Germany deleted 12 zeros from its currency, followed by Hungary in 1946 by deleting 29 zeros from its currency, as well as China in the same year where 8 zeros were deleted, and in the present day, several countries have done such things. Step like Zimbabwe, Sudan, Venezuela, Argentina, Brazil, Netherlands,Turkey and other countries, according to the University of North Carolina, that 70 countries have done this procedure since 1960, when 19 countries got rid of zeros once and ten countries twice, and the country that got rid of zeros the most is Brazil, where it took this step six times and got rid of 18 zeroes, which means that some countries They succeeded in this step and other countries failed. Therefore, they took this step more than once without success. Iran may be the last country that decided to delete 4 zeros from its currency after the significant decline in the value of the toman against the dollar, although some believe that there will be no positive impact on the Iranian economy because of Economic sanctions imposed on the country. ”
Al-Zubaidi asserts that “the aim of this step is to control inflation and high prices and facilitate the buying and selling process, especially when dealing in millions, which creates many problems for citizens carrying large quantities of currencies, difficulty reading prices and mathematical errors in reading the large number of zeros, as was the case in Turkey.” In addition to the costs of printing it.”
He points out that “the Netherlands succeeded in this work in 1960 because it put in place a strict policy to control prices and liquidity. Turkey also succeeded in this measure, with the testimony of the International Monetary Fund, for taking effective measures to combat inflation and was able to raise the value of the Turkish lira through the economic reforms taken by the government in all fields. It led to economic stability in the country and got rid of printing large numbers of its currency, as well as making it easier for citizens to read numbers and commodity prices. On the other hand, there are many other countries that, when taking such a step, failed to address the economic problem, especially inflation, such as Zimbabwe, Argentina and Brazil, as inflation continued to rise and so For not taking correct economic measures, which forced these countries to take this step more than once without any positive results, and some of them eventually resorted to abandoning the local currency and using hard currencies in local transactions.
He adds, “Therefore, in general, it can be said that deleting zeros from the local currency without meaningful and effective economic reforms in all economic sectors will be negative and have no positive impact on the national economy and does not contribute to reducing inflation, although some may delude that prices have decreased and the purchasing power of the currency Accordingly, it can be said that what was mentioned above applies to the Iraqi economy, and this step will have a negative impact if it is not carefully planned and is associated with effective economic measures, revitalization of national industry and support for the private sector to advance the national economy. Source