Iraq’s Central Bank Revisits Its Plan to Remove Zeros from the Dinar

The Central Bank of Iraq (CBI) has confirmed that the long-discussed plan to remove zeros from the Iraqi dinar remains in progress - though it’s still in the planning stage.

Governor Ali Al-Alaq made the remarks during the Duhok Conference on Economic and Financial Problems earlier this month, saying the project continues to be developed but will only move forward once conditions are right.

“The matter of removing zeros from the Iraqi currency is a project that still exists and is ongoing. We are planning for it, and in the future we will see progress on this matter.”
 - Ali Al-Alaq, Governor of the Central Bank of Iraq, speaking in Duhok (Oct 2025)

A Long-Running Plan That Keeps Resurfacing

The idea of dropping three zeros from the Iraqi dinar has circulated for over a decade. The Central Bank describes it as a currency redenomination, a technical reform designed to simplify accounting transactions, reduce the number of banknotes in circulation, and modernize the cash system.

In practice, redenomination changes only the face value of money - not its purchasing power. For example, 1,000 IQD would become 1 new IQD, while prices and salaries would adjust proportionally. The point is clarity and efficiency, not instant profit.

Countries such as Turkey and Brazil have taken similar steps when their economies outgrew their currencies’ numeric scales.

Why the Central Bank Is Re-Examining It Now

Governor Al-Alaq linked the project to Iraq’s current three-year budget, which carries what he called “very large expenditures and a high deficit.” He said the Central Bank of Iraq and Finance Ministry are working closely to preserve economic stability despite spending pressures.

He also reassured reporters that there are no obstacles to withdrawing oil revenues from U.S. banks, saying dollars are received daily and converted into dinars for government use.

This cooperation is crucial: Iraq’s economy depends heavily on oil revenues, and its foreign currency units - mainly U.S. dollars held abroad - play a direct role in the stability of exchange rates.

According to the World Bank’s Iraq Overview, Iraq’s heavy reliance on oil exports continues to expose its budget to global price swings - a key reason monetary and fiscal reforms, like the zero-removal project, remain under discussion.

What “Removing Zeros” Actually Means

When Iraqi officials talk about “deleting zeros,” they’re describing a currency reform, not a surprise revaluation. It’s about rebuilding the currency’s structure, making prices easier to read, reducing cash withdrawal volumes, and improving accounting accuracy across banks and businesses.

Redenomination is typically part of a broader modernization effort - introducing stronger banknote security features, encouraging electronic payments, and paving the way for more digital banking.

Al-Alaq has repeatedly said the project will only happen when the timing supports economic stability and confidence in the dinar.

A Currency That’s Finding Its Footing

The dinar’s official policy rate remains 1,320 IQD per USD, according to the Central Bank of Iraq, following efforts to narrow the gap between official and market exchange rates in recent months.

In parallel, the CBI has pushed new regulations to expand digital banking, streamline wire transfers, and promote electronic payments for salaries and public-sector transactions. These measures are intended to reduce reliance on cash, curb corruption, and align Iraq with international banking standards.

By moving gradually, the bank hopes to avoid shocks that could trigger financial crimes, confusion, or even a banking crisis during the transition.

What Ordinary People Should Know

Economists have been quick to caution that redenomination is not a shortcut to greater wealth.

Economists caution that removing zeros from the Iraqi Dinar is a technical accounting process – it doesn’t automatically increase value. They note that purchasing power depends on inflation, productivity, and fiscal discipline, not on the nominal value of banknotes.

If implemented, the process would involve a transition period where old and new banknotes circulate together. The Finance Ministry, banks, and payment networks would need to synchronize systems to ensure a smooth exchange and protect citizens’ cash savings.

Clear communication will be key. In past redenominations elsewhere, public misunderstanding led to temporary price confusion and loss of confidence - pitfalls Iraqi authorities say they want to avoid.

Building the Groundwork First

The Central Bank has been investing in the systems required to make any future redenomination possible:

• Payment infrastructure: expanding digital channels and linking government salaries to banking apps.
  
  
• Legal framework: strengthening oversight under the Central Bank Law.
  
  
• Transparency: publishing regular data on foreign reserves, inflation rates, and currency exchange activity.
  
  
• Security: tightening monitoring to prevent financial crimes and money laundering.

Officials say these reforms will help the country reduce its reliance on cash and improve international recognition of Iraq’s banking sector - two conditions often required before any major currency reform.

Why This Matters for the Economy

The plan to simplify the dinar isn’t just about changing numbers on bills. It ties directly into Iraq’s push for economic stability, infrastructure development, and a modern, transparent financial system.

By streamlining the currency, the CBI hopes to reduce accounting errors, lower transaction costs, and make it easier for foreign companies to do business in Iraq. In the long run, this could help attract investment and strengthen the dinar’s credibility.

But officials are realistic: redenomination will only succeed if it’s backed by steady growth, strong reserves, and careful management of the trillion-dinars in government spending that pass through Iraq’s budget each year.

What to Expect Next

For now, the zero-removal project remains a blueprint, not a countdown for the Iraqi currency. Policymakers have not released a timetable, and none of the required preparatory steps - such as printing new notes or public education campaigns - have begun.

When progress does come, Iraqis can expect several phases:

1. Official announcement and updated legislation.
   
   
2. Design reveal for new banknotes and coins.
   
   
3. Public information on how to exchange old notes.
   
   
4. Testing period for banks and digital systems.
   
   
5. Full transition, once stability is assured.
   
   

The Iraqi Central Bank has emphasized that the process will be gradual and carefully managed to maintain stability of exchange rates and public confidence.

For now, the CBI’s focus remains on financial coordination, safeguarding oil revenues, encouraging digital banking, and maintaining economic stability. The governor’s message was clear: the groundwork comes first, and the numbers will follow.