The Central Bank of Iran (CBI) is planning to introduce the Central Bank Digital Currency (CBDC), the digital rial, according to an announcement made by CBI Governor Mohammad Reza Farzin at the Modern Banking and Payment Systems Conference on November 25.
Farzin stressed the importance of keeping Iran’s financial system modern and resilient, pointing to the country’s strong digital financial infrastructure and commitment to innovation in the face of foreign sanctions.
The digital rial has been in development since 2018, using open-source Hyperledger Fabric technology. By mid-2023, it had completed a “pre-pilot” research phase that included major Iranian banks.
In June, the CBI launched a retail CBDC trial on Kish Island, a free trade zone that hosts millions of tourists each year. The digital rial is currently designed for domestic use, and its non-intermediated approach focuses on improving retail financial transactions.
Farzin emphasized the CBI’s overarching purpose of ensuring cutting-edge banking standards. “Developing innovative banking systems is a central bank’s responsibility worldwide, and we are determined to fulfill this duty in Iran,” he told reporters. The CBDC launch is part of a bigger plan to reform Iran’s banking industry and respond to global financial trends.
To resolve sanctions-related issues, Iran has enhanced its financial relations with Russia, including integrating the Iranian Shetab payment system into Russia’s MIR network.
This change provides an alternative to SWIFT and enables speedier transactions, handled in less than two seconds. Farzin emphasized that these initiatives are a component of a strategic plan to align with the economies of the BRICS, which are changing the dynamics of international trade.
Russia and Iran have also worked together on other financial initiatives, such as a stablecoin backed by gold that can be used for international payments. Despite the dangers of breaking US sanctions, Iran has also experimented with cryptocurrencies for international trade.
These actions show Iran’s dedication to using fintech technologies to strengthen its financial independence and get beyond economic limitations.
The digital rial marks Iran’s push to modernize its financial system, boost domestic capabilities, and deepen ties with allied economies despite sanctions.
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