Awake-in-3D: Removing IQD Three-Zero Notes and Protection of Executive Order 13303

Removing IQD Three-Zero Notes and Protection of Executive Order 13303

On March 18, 2024
By Awake-In-3D

Could Iraq’s potential economic overhaul render your foreign-held Dinars worthless overnight? Understanding concerns and facts behind a move reminiscent of India’s 2016 currency shake-up.

Recently, I’ve turned my focus toward the economic and currency conversations unfolding in Iraq, outlining strategies that might redefine the value and global stance of its currency, the Iraqi Dinar (IQD).

These moves spark a broad spectrum of interest among RV/GCR currency holders, thanks to their far-reaching effects and consequences on the financial world at large.

Clarifying an IQD Revaluation vs. Re-denomination

At the core of the issue, we find two pivotal concepts: revaluation (RV) and re-denomination.

Revaluation signifies a deliberate shift in a country’s currency exchange rate against others, altering its buying power.

Conversely, re-denomination shifts the currency’s face value without touching its foreign exchange rate or purchasing power.

For instance, Iraq’s potential action to slash three zeros off its currency means swapping a 25,000 IQD note, worth $19.00 today, for a new 25 IQD note, which will also remain at $19.00.

Removing the 3 zeros changes the IQD exchange rate from 1310 IQD per Dollar to 1.310 IQD per dollar. It’s a perceived value rate change, but the purchasing power remains exactly the same. It’s just a decimal digit change.

Iraq’s 3-Zero Strategy and its True Meaning

The Iraqi Ministry of Finance openly contemplates re-denominating the IQD to fortify the economy.

This tactic aims to streamline currency transactions and boost the dinar’s esteem by nominally enhancing its value, although its purchasing power stands still.

Such a strategy is pivotal for persuading Iraqis to shift from stockpiling cash or leaning towards foreign currencies, mainly the USD, towards embracing and trusting the IQD for local, everyday dealings.

Potential Fallout for Foreign IQD Currency Holders

A looming concern is Iraq mirroring India’s 2016 demonetization approach, which instantly made high-denomination Rupee notes obsolete for non-Indian residents abroad.

Aimed at undercutting the black market and propelling banking usage, this move inadvertently left foreign-held notes as mere paper.

If Iraq opts to demonetize the Dinar during re-denomination, those of us holding ancient IQD notes overseas might face similar doom, watching our investments evaporate into worthless keepsakes.

But what about EO 13303?

The Role of Executive Order 13303

Executive Order 13303, enacted by President George W. Bush in 2003, stands as a critical document in protecting Iraq-related assets, including IQD holdings abroad.

This decree shields against legal actions like asset seizure or freezing, offering a safety net for foreign IQD investments.

Yet, as Iraq strides toward full sovereignty, completely doing away with all U.S. influence over their legal and financial affairs, I hold valid concerns about this protection’s durability.

A fully autonomous Iraq could make EO13303 irrelevant, exposing us as foreign IQD holders to risks akin to those faced by foreign Rupee holders post-India’s currency overhaul.

The Realistic Picture of a Sky High Fiat-based IQD Revaluation

I view the prospect of a significant IQD value uptick through revaluation with a healthy dose of skepticism. The economic and mathematical hurdles are towering.

Matching a revaluation to $3.00 per IQD would demand financial wizardry, given the colossal volume of circulating IQD and the astronomical funds this would require—akin to rivaling the GDP of superpowers like the United States and China.

Without backing by a tangible asset like gold, dreaming of such an IQD revaluation seems a stretch.

We do not want a Fiat-based RV attempt of the IQD.

If Iraq goes ahead with its re-denomination and issuing new notes before they can initiate a gold-backed IQD, we may all be faced with having to turn in our 3-zero notes for the new IQD fiat notes without an RV. Then the possibility arises that Iraq will invalidate the old IQD notes outside the country similar to what India did with their Rupee notes in 2016.

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