The Swiss dinar ( ar, دينار سويسري) was the
Iraq
Iraq,; ku, عێراق, translit=Êraq officially the Republic of Iraq, '; ku, کۆماری عێراق, translit=Komarî Êraq is a country in Western Asia. It is bordered by Turkey to Iraq–Turkey border, the north, Iran to Iran–Iraq ...
i currency in circulation prior to the
1990 Gulf War
The Gulf War was a 1990–1991 armed campaign waged by a 35-country military coalition in response to the Iraqi invasion of Kuwait. Spearheaded by the United States, the coalition's efforts against Iraq were carried out in two key phases: ...
.
Name
The reason for the adjective "Swiss" is unknown, two possible explanations have been offered.
It has been claimed the
printing plates for the currency came from
Switzerland
). Swiss law does not designate a ''capital'' as such, but the federal parliament and government are installed in Bern, while other federal institutions, such as the federal courts, are in other cities (Bellinzona, Lausanne, Luzern, Neuchâtel ...
, although the notes were actually produced in the
United Kingdom
The United Kingdom of Great Britain and Northern Ireland, commonly known as the United Kingdom (UK) or Britain, is a country in Europe, off the north-western coast of the continental mainland. It comprises England, Scotland, Wales and North ...
by
De La Rue
De La Rue plc (, ) is a British company headquartered in Basingstoke, England, that designs and produces banknotes, secure polymer substrate and banknote security features (including security holograms, security threads and security printe ...
.
While this claim is widespread, the actual origins of the plates are unknown as no sources close to De La Rue or the
Central Bank of Iraq
The Central Bank of Iraq (CBI) ( ar, البنك المركزي العراقي) is the central bank of Iraq. It was established in 1947, the same year in which the British occupation of Iraq was ended. CBI's primary objectives are to ensure domestic ...
have made any comment on the matter.
The second possible explanation is that prior to the
Gulf War
The Gulf War was a 1990–1991 armed campaign waged by a 35-country military coalition in response to the Iraqi invasion of Kuwait. Spearheaded by the United States, the coalition's efforts against Iraq were carried out in two key phases: ...
, Iraq was historically a low inflation country, similar to Switzerland.
History
Inter-war period
After the Gulf War, the Iraqi government disendorsed the old currency, favoring newly printed ''
Saddam
Saddam Hussein ( ; ar, صدام حسين, Ṣaddām Ḥusayn; 28 April 1937 – 30 December 2006) was an Iraqi politician who served as the fifth president of Iraq from 16 July 1979 until 9 April 2003. A leading member of the revolution ...
dinars'', and the ''Swiss dinar'' ceased to be
legal tender
Legal tender is a form of money that courts of law are required to recognize as satisfactory payment for any monetary debt. Each jurisdiction determines what is legal tender, but essentially it is anything which when offered ("tendered") in pa ...
. However, the old currency still circulated in the politically isolated
Kurdistan region of Iraq
Kurdistan Region ( ku, هەرێمی کوردستان, translit=Herêmî Kurdistan; ar, إقليم كردستان), abbr. KRI, is an autonomous region in Iraq comprising the four Kurdish-majority governorates of Erbil, Sulaymaniyah, Duhok ...
. The government of the Kurdistan region did not have the printing plates of the ''Swiss dinar'', but it also refused to accept lower-quality ''Saddam dinar'' banknotes (which were issued in huge amounts). Since the supply of ''Saddam dinar'' banknotes increased while the supply of ''Swiss dinar'' banknotes remained stagnant (even decreased because of notes taken out of circulation), the ''Swiss dinar'' appreciated against the ''Saddam dinar'' note. By having its own stable currency, the Kurdistan Region of Iraq effectively evaded inflation, which ran rampant throughout the rest of the country.
Post-war
Following the 2003 invasion the
Coalition Provisional Authority
)
, capital = Baghdad
, largest_city = capital
, common_languages = ArabicKurdishEnglish (''de facto'')
, government_type = Transitional government
, legislature = Iraqi Governing Council
, title_leader = Administrator
, leader1 = Jay ...
, installed by the
Coalition Forces
' ps, کمک او همکاري '
, allies = Afghanistan
, opponents = Taliban Al-Qaeda
, commander1 =
, commander1_label = Commander
, commander2 =
, commander2_label =
, commander3 =
, comman ...
, determined that Iraq needed a new, unified currency, but establishing a proper exchange rate was relatively difficult. The market exchange rate for ''Saddam dinars'' 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 (PPP) is the measurement of prices in different countries that uses the prices of specific goods to compare the absolute purchasing power of the countries' currency, currencies. PPP is effectively the ratio of the price of ...
, 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 dinar'' notes for ''Swiss dinars''. Since printing more ''Saddam dinar'' notes was not politically favored, after consulting with a currency expert, the Coalition decided to alter the ''Swiss dinar'' plates to the ''Saddam dinar''
denominations. This would allow the least amount of currency exchange, but also take Saddam's image 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 convoys.
References
* (BROKEN)
*
*
{{DEFAULTSORT:Iraqi Swiss Dinar
Currencies of Iraq
Currencies of Asia
Modern obsolete currencies
Economic history of Iraq
20th century in Iraq