As a researcher who has spent years delving into the intricacies of global finance and its digital transformations, I find Iran’s CBDC launch a fascinating development. The country’s determination to innovate within the constraints of sanctions is commendable, showcasing a resilient spirit that mirrors the ancient Persian empire’s adaptability in the face of adversity.
In the not too distant future, it has been announced that Iran will unveil its own central bank digital currency (CBDC). This was disclosed by Mohammad Reza Farzin, the governor of the Central Bank of Iran (CBI), during a national banking conference held on November 25. He emphasized Iran’s advanced digital financial infrastructure and vowed to keep pushing for innovation despite ongoing sanctions.
CBDC to keep the financial system up-to-date
At the Modern Banking and Payment Systems Conference in Tehran, I emphasized that the introduction of CBDC is an integral part of our ongoing efforts to keep banking practices current and relevant. (As reported by Tasnim news agency.)
“Developing innovative banking systems is a central bank’s responsibility worldwide, and we are determined to fulfill this duty in Iran.”
As an analyst, I’ve been tracking the progress of the digital rial since its inception in 2018. This innovative currency leverages open-source Hyperledger Fabric technology. By mid-2023, we moved beyond the theoretical and entered the “pre-pilot” phase of research, collaborating with prominent Iranian banking institutions to pave the way for its practical application.
In June, the CBI initiated a trial program for a retail Central Bank Digital Currency (CBDC) on the Iranian island of Kish, a popular free trade zone that attracts around 12 million tourists annually. At this stage, it seems that the digital rial being tested does not involve intermediaries and is primarily intended for domestic transactions.
Fintech to beat sanctions
Farzin pointed out that international sanctions pose a substantial challenge to the CBI, yet advancements are being achieved. He specifically referred to the unification of the Russian MIR and Iranian ACU payment systems which occurred in October as an example of this progress.
“We’ve replaced SWIFT with this platform and strengthened our ties with BRICS, which is shaping global trade with a strategic plan through 2025.”
Moreover, Farzin stated that the Iranian Shetab payment system, which can handle transactions in less than two seconds, is one of the most effective systems in the region. Additionally, it’s currently undergoing the early phases of integration with Russia’s MIR payment system.
Iran and Russia have worked together on various border transactions including a digital currency backed by gold (a stablecoin). Iran has even explored using cryptocurrencies for foreign commerce. However, digital currency trading platforms encounter potential penalties for conducting business with Iran, as such actions may breach U.S. sanctions.
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2024-11-26 21:24