Banknotes issued by the Central Bank of Iraq before the Persian Gulf War were oftentimes referred to as the Swiss Dinar. The name “Swiss Dinar” is believed to be derived from the Swiss printing technology that De La Rue used for producing these paper bills. Another theory stated that the Iraqi dinar was considered to be the Swiss Dinar of the Middle East region because of its stability. These banknotes are of a more superior quality compared to those banknotes printed after the war.
Post Gulf War Dinar
After the 1991 Gulf War, the Saddam Hussein regime was weakened due to the UN economic blockade. With the embargoes, Iraq could no longer obtain banknotes from De La Rue. To keep up with expenditures such as salaries, the country decided to produce notes both locally and in China using inferior-quality wood pulp paper instead of cotton or linen. These were printed through poor quality lithography technique and some were allegedly printed on newspaper printing presses. For that reason, these notes were easily counterfeited as they lacked security features such as watermarks and security threads. Moreover, counterfeit paper bills were deemed to be of higher quality than these banknotes.
Dual Price System – Swiss Dinar Vs New Dinar
In most cases, when a country releases a polymer version of a banknote which would circulate along with its paper version, both notes would be of the same value. This wasn’t the case for the Iraqi dinar. Although of the same currency and issuer, post-gulf war banknotes were of lower value than the pre-war dinar. Rather than enhancing the quality of these banknotes which was next to impossible, the Hussein government un-endorsed the Swiss dinar to move away from the dual price system. However, the old banknotes were still used in the Kurdish regions. That is until a new dinar was introduced following the second Gulf War. While the Swiss dinar retained its value at the time, the post-war money continued to lose its worth.