What Is the Difference Between a Revaluation and a Redenomination?

These are two different events, they are constantly mixed together, and that confusion is exactly where people go wrong. Getting them straight is most of understanding this whole subject.

A redenomination is a note swap. Iraq takes the old banknotes back during an exchange window, hands over new notes, and destroys the old paper. It changes the paper, and it changes the price tags along with it. If the number on a note comes down, the cost of a loaf of bread comes down by the same amount, so a person inside Iraq buys exactly what they bought the day before. Nobody's purchasing power is cut, and no holder's wealth is deleted. It is housekeeping for a cash system carrying far too much paper. Iraq ran this shape in 2003, and Kuwait ran it in 1991. On its own it pays a holder nothing, and it is not the lop that frightens people. It simply restates the paper.

A revaluation is the opposite kind of event. It reprices what one dinar is worth against the dollar, and the direction is up, toward the value of the country behind it. This is the event holders are actually positioned for, and it is a decision about worth, not about paper. Iraq is not cutting the value of its currency or the purchasing power of its people. It is letting a currency that has been held far below the value of the country finally price at that value.

The distinction matters most when you apply it to your own notes, because the trap is running your holding through the wrong event. Never divide your dinars down as though a redenomination shrinks them. For a foreign holder the payout rides the revaluation, at face value. A 50,000 note is honored as 50,000 at the new rate, settled off-soil through the international banking layer against pre-positioned collateral, and the zeros that come off the domestic paper never touch it. We plan that at one to one, and anything higher is a blessing. So the whole of it is this: the paper change touches no one's wealth, and the reprice is the event that pays. That is why we keep them as two separate mechanisms, laid out with the sources in does deleting the zeros wipe out your dinar, Iraq's currency explained, and the case for revaluation.

The full architecture behind the reprice, with the sources, is the book, Head of the Snake.

Related questions

• Does deleting the zeros wipe out your dinar?
• Is Iraq ready to drop the zeros?
• When will the Iraqi dinar revalue?