Iraq can’t use the dinar as a reserve currency. There are only six or so reserve currency’s in the world, the US dollar, Euro, Pound Sterling etc. The definition of a reserve currency is: A reserve currency (or anchor currency) is a currency that is held in significant quantities by governments and institutions as part of their foreign exchange reserves. The reserve currency is commonly used in international transactions and often considered a hard currency or safe-haven currency. Moving to Article VIII doesn’t qualify a currency to be considered a reserve currency, it takes a large economy combined with a stable government who has a proven economic history of stability as well.
Iraq is, if I’m a betting man, about 50 years from even being considered a reserve currency. Iraq’s position is also different because the majority of their income is derived from petro dollars. These dollars are used to purchase dinars from the CBI by the MoF and used to pay their bills and salaries. Any leftover is absorbed by the CBI and become reserves. That’s been Iraq’s problem now for two years, they’re spending more than they make and the reserves are cannibalized because of it. There are countries around Iraq…Kuwait, Saudi Arabia, Qatar and Jordan…who’ve had active economies and stable governments for years and they’re not even sniffing reserve currency status.
