Iran is next in line to pilot its own central bank digital currency

• Reports indicate that the CBI is to begin the pilot phase of its proposed central bank digital currency initiative
• The country’s central bank will need at least one more year to examine the economic, social and legal aspects of launching the digital Rial

In the last few years, particularly since the pandemic, more than one central bank around the world has begun ramping up their digital currency research and development efforts, from concept to implementation. Joining the list of countries that are planning on piloting a central bank digital currency this time around is the MENA territory of Iran. 

Based on Iranian Labour News Agency, the Central Bank of Iran (CBI) vice governor for IT affairs, Mehran Moharamian, reckons that CBDCs could be the solution to solving decentralization resources and financial inconsistencies. Meanwhile, a separate report quoted the country’s head of CBI’s information services company Abutaleb Najafi said that the digital currency will be tested in a trial phase with banks, payment service providers and consumers.

“We carried out about two years of continuous work on the platform and on the infrastructure needed for CBI’s cryptocurrency and now its pilot version is ready,” he outlined. Najafi also highlighted that state-run and private banks in Iran are expected to launch services that will allow customers to open digital wallets that can use e-currency during the trial phase.

Details on Iran’s central bank digital currency pilot phase still remain scarce, but Najafi did say that the CBI will need at least one more year to examine the economic, social, and legal ramifications of launching the digital Rial. He further noted that the project could entail massive risk assessment procedures.

“A document has been compiled in the CBI on the issue and we have created the platform which would apparently mature within a year,” he noted. The country’s efforts to create an official digital currency come amidst a spread of cryptocurrencies like bitcoin in the country.

To recall, the Iranian government has maintained a ban on the trade of cryptocurrencies while cracking down on illegal mining activities related to those currencies. It is fair to note that the country’s central bank executive arm, the Informatics Services Corporation, did initiate a digital trial back in 2018, after banning Bitcoin trading amid claims of money-laundering and erratic price swings concerns.

The Iranian cryptocurrency then was jointly developed by the CBI, the state-run Post Bank, and Iran’s ICT ministry. Though it wasn’t officially stated, industry watchers are alleging that Iran’s move to develop its own cryptocurrency is to mainly circumvent the US economic sanctions.

To top it off, the country’s central bank, according to a local media outlet, has reached an agreement with the Ministry of Industry, Mines, and Trade to allow local businesses to utilize crypto assets when making international payments.