How an invalidated note kept circulating
After Iraq invaded Kuwait in 1990, international sanctions and the disruption of normal trade made it difficult for Saddam Hussein’s government to obtain the materials and equipment used to print its currency. The government began issuing a replacement dinar, produced with less sophisticated methods and bearing Saddam’s portrait. In 1993, it declared the older notes invalid.
But in Kurdish-held northern Iraq, the old notes remained in use. Baghdad’s authority there had weakened after the 1991 uprising and the creation of a protected zone, and the new Saddam dinars did not displace the currency people already trusted and traded. The older notes came to be known as Swiss dinars, a name associated with their higher-quality printing—not a separate currency issued by Switzerland.
A fixed supply became an advantage
No new Swiss dinars were being printed, so the number of notes in circulation could only stay the same or shrink as bills wore out, were lost, or were kept aside. Meanwhile, people still needed money to buy goods and settle debts. That combination helped the notes retain value, while the government’s replacement currency lost purchasing power amid rapid inflation.
Scarcity alone does not make money valuable: people must also expect others to accept it. In the north, continued everyday use gave the Swiss dinar that practical credibility. Merchants could price goods in it, and households could save it, because the next person was likely to take it too.
The two currencies meet again
When Iraq replaced the Saddam-era notes after his government fell in 2003, authorities exchanged the currencies at a set rate: 150 Saddam dinars for one Swiss dinar. The old notes had not become valuable simply because they were old; they had survived as a working currency in a region where people kept using them. Their eventual exchange put a striking number on that long divergence: the notes Baghdad had declared worthless had outlasted its replacement.
