There are two prices of money. One is the interest rate which lenders charge. The other is the price one country’s money has in another country. This price is called the exchange rate. For instance, the pound sterling of Great Britain, the franc of France, and the peso of Mexico have a price in the money of other nations. An American in the past could buy a pound, franc, or peso for a certain amount of American money. Sometimes the money value changes rapidly.
The convertibility refers to the ability to convert, or exchange, the currency of one country into the currency of another country. The currency of some countries is convertible throughout the world. Examples include the United States and Canadian dollars, the Mexican peso, and the Swiss franc. Other countries’ money are exchangeable only in certain areas. For example, the ruble of Russia is exchangeable only with currencies of other Communist countries. At this point in time, Russia is working to change this so that all countries money can be exchangeable.
The purpose of this story is to talk about ISIS and Iraq’s money that ISIS stole when it invaded Iraq and robbed the banks of billions of dollars and are supposed to be rich beyond their wildest dreams. My question is – why can’t Iraq change the name of their currency and reissue the money under a new name and leave ISIS holding the bag of old money? I know it is a lot more complicated than this; but, at it least these people would not be able to spend or sell all of Iraq’s oil on the black market or spend any of the old money for military hardware. Sounds sensible to me!