The dinar is the official currency of the Hashemite Kingdom of Jordan. It is a decimal currency composed of three subunits: 10 dirham, 100 qirsh or piastre and 1000 fils. Fil-denominated currency and dirham are no longer used, but qirsh-denominated coins continue to be minted. The dinar has been in circulation since 1950, and the currency is issued by the Central Bank of Jordan. The central bank has traditionally been a proponent of pegging the dinar to the U.S. dollar, and it is currently fixed at 1 JOD: 1.41044 USD. However, the dinar is officially pegged to the International Monetary Fund’s (IMF) Special Drawing Rights (SDRs) and not to the U.S. dollar.
Up until 1949, the currency of Jordan was the Palestinian pound, a pound sterling-based currency that existed before the creation of the State of Israel. When Israel was made a political nation, Jordan established its own currency, the Jordanian dinar, which was introduced by the Jordanian Currency Board as a series of banknotes and coins.
The Central Bank of Jordan was established in 1959, and it officially began operations in 1964 with capital funded entirely by the government. Although the capital is completely from the government, the Central Bank of Jordan is an independent and autonomous corporation. The main functions of the central bank are to issue and regulate currency, manage gold and foreign reserves and to act as a banker to the government and commercial financial institutions. Unlike many other central banks, the Central Bank of Jordan does not implement monetary policy but simply advises the government on setting monetary policy. In 1964, the Central Bank of Jordan issued its first series of banknotes, but a new series of coins was not minted until 1968.
Unlike many countries of the Middle East, Jordan does not have an abundance of oil reserves. This scarce supply of natural fossil fuels has made Jordan reliant on aid from its allies in the Middle East who have abundant supplies of oil. Jordan is often plagued with water shortages, fuel shortages, unemployment and debt. In order to alleviate some of these economic difficulties, Jordan has been working closely with the IMF in order to bring about economic reform. Privatization of key businesses and a relaxed trade regime has made Jordan eligible for membership into the World Trade Organization and has raised the interest of foreign investors.