Iran has begun experimenting with a Central Bank Digital Currency (CBDC), partnering with two local banks to launch a pilot scheme.
The launch of Ramzrial (digital real) by the Central Bank of Iran has made Iran one of the top contenders for digital currency in the region.
Only a few countries have fully launched CBDCs such as the Bahamas, Jamaica and Nigeria. Around 26 other central banks are conducting pilot projects, according to the Switzerland-based Bank for International Settlements, and most central banks around the world say they are considering at least this area.
For most countries, the main purpose of CBDC is to make international trade more efficient. For Iran, the issue reverberates because of the international sanctions it faces.
To avoid the impact of US sanctions, Tehran has sought ways to reduce its reliance on the US dollar. in early August, Use of cryptocurrencies For international trade, we have a $10 million deal. However, there have been no reports of similar deals since.
The CBDC launch marks another step in Iran’s digital currency experimentation.
CBDC is different from well-known cryptocurrencies such as Bitcoin.
Getting local buy-in can be difficult
Iranians are no strangers to cryptocurrencies. In fact, the scale of domestic crypto mining activity puts serious pressure on the power grid, widespread blackout.
Ramzrial’s plans were announced in January. Quote by local Ibena The news agency said the CBDC was approved earlier that month. In June, central bank governor Ali Saleh Abadi said he would introduce the currency in September.
That deadline was met, Abadi and Statements of the last few days A limited number of people donated 1 billion tomans ($311,000) by Bank Melli and Mellat Bank, the country’s two major financial institutions, and two stores designated for use of the currency.
Many aspects of this pilot scheme remain unknown. For example, it is not clear how many people were involved in the trial, who they were, why they were given the money, or what they could use it for.
Ramzrial basically works as a digital equivalent of regular Iranian rial banknotes. However, like any other digital product, its use can be easily tracked by authorities.as a recent extensive demo A country-wide investigation into Mahsa Amini’s death in police custody reveals that many locals distrust and resent the Islamic Republic. In that environment, the spread of Ram’s Real may not be possible. Many Iranians are likely to shy away from tools that could form part of the state’s broader surveillance system.
Other Gulf countries also test water
While Iran is not the first Gulf country to trial a CBDC, it appears to be the first to launch a retail version for personal use, as opposed to a wholesale version restricted to use by financial institutions. is.
In 2019, the central banks of Saudi Arabia and the UAE launched Project Aber to test the viability of a joint digital currency for cross-border trade. They have since said the pilot was a success, but no broader follow-up plans have yet been announced.
The United Arab Emirates has also been involved in another pilot scheme in 2021, the mBridge project with the central banks of China, Hong Kong and Thailand.
Other Gulf states are more cautious, but all are more or less interested in the idea.