Iran’s Central Bank, also known as Bank Markazi, is set to begin a pilot program for its digital currency, the digital rial. This initiative aims to modernize and simplify domestic transactions by enabling cashless transactions for banking customers.
Pilot Program Details
Starting in July, the Central Bank of Iran (CBI) will allow banking customers and tourists on Kish Island to use digital wallets and QR codes for purchases and fund transfers. This move is expected to boost the resilience and efficiency of the payment infrastructure, particularly enhancing e-commerce and the digital economy.
The CBI has been testing its digital currency since 2022. The limited pilot phase, which began in June 2023, has shown promising results. The state-controlled digital currency aims to increase payment security while simplifying transactions compared to traditional card payment methods.
Recent Developments and Sanctions
In February, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) imposed sanctions on several entities. These entities were accused of facilitating the illegal export of goods and technology to Iran. Among those sanctioned was the Iran-based Informatics Services Corporation (ISC), a subsidiary of the Central Bank of Iran. The ISC was responsible for developing the central bank digital currency platform (CBDC). OFAC stated that the ISC had provided support to CBI, which led to these sanctions.
The ISC began working on the digital rial in 2018 using Hyperledger Fabric, a blockchain framework hosted by the Linux Foundation. The development of the digital rial is part of Iran’s broader strategy to enhance its financial technology infrastructure.
The CBI believes that the digital rial will create new business models, especially in e-commerce and the digital economy. By enabling cashless transactions, the digital rial is set to transform the way banking customers and tourists conduct financial activities in Iran. This pilot program marks a significant step towards a more digitalized and efficient payment system in the country.