Iran eyes CBDC pilot to decentralize resources

Getting your Trinity Audio player ready...

Iran plans to launch a pilot for its central bank digital currency (CBDC) in the near future, a top-level executive has revealed. The Iranian central bank believes that the CBDC can resolve inconsistencies with its financial system and decentralize resources.

According to a report by the Iranian Labour News Agency, Mehran Moharamian, the vice governor for IT at the Central Bank of Iran (CBI), didn’t provide any dates for the pilot although he says it will be very soon.

Mehran believes that a digital rial will allow for the decentralization of resources in Iran, a country that has been plagued by corruption for decades. In the 2020 Corruption Perception Index published by Transparency International, the country ranked 149th out of 180 countries with a score of 25 out of 100. Several of the country’s high-ranking government officials, including the Speaker of Parliament and top judges, have been implicated or convicted of corruption in recent years.

The CBI also believes that a digital rial will solve inconsistencies in the local financial ecosystem. These will undoubtedly give financial institutions and regulators an easier time with AML and KYC checks. Iran has been one of the countries on the grey list of the Financial Action Task Force (FATF) for its laxity in these two areas. The country has also failed to pass financial regulations that would align it with the requirements of the FATF guidelines.

Iran began developing the digital rial in 2018 when the CBI tasked the Informatics Services Corporation with building the CBDC. The corporation is an executive arm of the CBI that operates Iran’s banking automation and payment services network.

As the CBI gears to launch the CBDC pilot, Iranians could get a chance to transact in Bitcoin SV and other digital currencies when trading with international partners. As CoinGeek reported, a local outlet claimed that the CBI had partnered with the Ministry of Trade to link the national payments platform to a trading system that allows users to settle transactions in digital currencies.

To learn more about central bank digital currencies and some of the design decisions that need to be considered when creating and launching it, read nChain’s CBDC playbook.

Watch: CoinGeek New York presentation, The Path to BitCoin Adoption: How to Turn the Entire Web into Bitcoin Apps