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Zero Lop or Zero Lopping the Dinar Analysis

13 Jul 2006
Both Russia and Afghanistan are countries who have zero lopped their currency. Lets look at their situations in relation to the Iraqi Dinar and the speculation and rumors about Iraq doing a zero lop on their currency: Afghanistan had 4 types of currency in circulation as a result of a civil war. It was unknown how much of each was in circulation. For the people and the government, this was a very difficult situation. As a result, the currency kept losing it's value. They needed something both credible and efficient to use as currency. You did not want people carrying around bags of money since everything is cash based. Their zero lop happened at the same time as they printed new currency to replace the confusing mix they had before. This ensured everyone had the same currency, there was a known amount in circulation, and people could buy and sell things with few notes. It has little in common to the Iraqi Dinar and the speculation about the zero lop. Iraq has already printed and established a single national currency, with secure features and knows exactly how much is in circulation. The Dinar denominations are already designed to carry high or low values without carrying around sacks of money. It makes no sense for them to change the face of the currency, when they are talking about increasing the value to fit their economic goals. Russia performed zero lopping to their currency in 1998. They did this in response to hyperinflation and to restore confidence in their currencies structure and value. Iraq has roughly only 20% inflation. Russia also had denominations that went too high - they had denominations of 5k, 10k, 50k, 100k, and 500k - which were replaced with denominations of 5, 10, 50, 100 , and 500. In comparison, Iraq's highest denomination is the 25k and has denominations all the way down to 25 Dinar. If Iraq did zero lopping off the structure of the bills, they would overlap denominations that already exist. This does not make sense or fit the stated goals with the Iraqi Dinar. It seems that a zero lop, or zero lopping would not occur with the denominations of the Dinar, but by increasing it's value with a revalue that would benefit their economy and their poor in a positive way.
Child Aid International