Mohammad Reza Farzin, the governor of the Central Bank of Iran (CBI), announced at a national banking conference on November 25 that Iran will introduce a central bank digital currency (CBDC) shortly.
He emphasized the country’s advanced digital financial infrastructure and vowed to innovate despite sanctions.
According to Tasnim, Farzin stated at the Modern Banking and Payment Systems Conference in Tehran that the introduction of the CBDC is a component of a broader initiative to preserve contemporary banking practices. Farzin stated:
“Developing innovative banking systems is a central bank’s responsibility worldwide, and we are determined to fulfill this duty in Iran.”Â
The digital rial has been under development since 2018 and is purportedly based on open-source Hyperledger Fabric technology. It concluded the “pre-pilot” research phase with significant participation from Iranian institutions by mid-2023.
In June, the CBI initiated a retail CBDC pilot initiative on the island of Kish, a free trade zone in Iran that receives up to 12 million tourists annually. The digital rial is non-intermediated and intended for domestic use.
Fintech to Evade Sanctions
The CBI continues to face substantial obstacles, according to Farzin, although international sanctions continue to be in place. He referenced the October integration of the Russian MIR and Iranian ACU payment systems, stating:
“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 stated that the Iranian Shetab payment system is among the most efficient in the region, with transactions processed in under two seconds. It is also in the process of establishing a connection with Russia’s MIR system.
Iran and Russia have collaborated on other cross-border payment products, including a gold-backed stablecoin.
Iran has also explored the utilization of cryptocurrency for international trade; however, cryptocurrency exchanges are subject to penalties for conducting business with Iran in violation of US sanctions.
