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The digital rial is being developed for retail purposes so far, but the integration of Iranian payment systems with Russia may foil US sanctions.
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Iran will launch a central bank digital currency (CBDC) in the near future, Central Bank of Iran (CBI) governor Mohammad Reza Farzin said at a national banking conference on Nov. 25. He called attention to the country’s well developed digital financial infrastructure and pledged to continue to innovate in the face of sanctions.
CBDC to keep the financial system up-to-date
The CBDC launch is part of a larger effort to maintain modern banking practices, Farzin said at the Modern Banking and Payment Systems Conference in Tehran, according to news agency Tasnim. Farzin said:
“Developing innovative banking systems is a central bank’s responsibility worldwide, and we are determined to fulfill this duty in Iran.”
The digital rial has been in development since 2018 and reportedly uses open-source Hyperledger Fabric technology. By mid-2023, it had completed the “pre-pilot” stage of research with the involvement of large Iranian banks.
The CBI launched a retail CBDC pilot project in June on the island of Kish, which is an Iranian free trade zone that hosts 12 million tourists per year. The digital rial is so far apparently non-intermediated and focused on domestic use.
Source: Iran Daily
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Fintech to beat sanctions
Farzin said international sanctions “remain a significant hurdle” for the CBI, but progress is being made. He mentioned the integration of Russian MIR and Iranian ACU payment systems that took place in October, saying:
“We’ve replaced SWIFT with this platform and strengthened our ties with BRICS, which is shaping global trade with a strategic plan through 2025.”
In addition, Farzin said the Iranian Shetab payment system, “with transactions processed in under two seconds, is among the most efficient in the region.” It is also in the initial stages of connecting with Russia’s MIR system.
Iran and Russia have collaborated on other cross-border payment products, such as a gold-back stablecoin. Iran has also experimented with the use of cryptocurrency for international trade, but cryptocurrency exchanges face consequences of doing business with Iran in violation of US sanctions.
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This article first appeared at Cointelegraph.com News
