The Central Bank of Iran has spoken to banks and credit institutions about regulations surrounding a crypto-rial. The CBDC will involve various financial institutions that can implement smart contracts, with the central bank managing the currency.
Iran has become the latest country to work on a Central Bank Digital Currency. The Iran Chamber of Commerce, Industries, Mines, and Agriculture announced on April 11 that the Central Bank of Iran had informed banks and credit institutions about regulations relating to a crypto-rial.
Iran throws its hat in the CBDC arena
The regulations discuss how to mint and distribute the CBDC, with the central bank being in charge of the currency. The Chamber of Commerce report notes that the network will be a permissioned one, “consisting of authorized financial institutions and capable of implementing smart contracts.” Only the Central Bank of Iran will decide the maximum supply of the currency.
The crypto-rial, like other CBDCs, is merely a digital representation of the country’s fiat currency and will exist alongside cash. It is interesting that the crypto-rial mentions smart contracts, however, as it might mean that the banks can implement novel financial services through it — or at least upgrade legacy systems.
Of course, other central banks in the world are likely thinking the same thing, though not too many have explicitly mentioned the application of smart contracts. The latter is what can make finance so particularly potent, as Decentralized Finance has so effectively proven.
The report reminds readers that 55 countries are currently working on a proof-of-concept for a CBDC, with nine countries having fully launched digital versions of their fiat currencies. That number is almost certain to grow, as proven by the success of pilot programs and general adoption.
CBDCs now a priority for many countries
There has been a rise in interest in CBDCs from various governments over the past 12 months. As Iran’s authorities rightly note, only a handful have fully launched a currency and none belong to the world’s largest economies. China has come closest with its multiple tests of the digital yuan in various cities, but it is yet to be fully launched.
India is also expecting to launch its CBDC, the digital rupee, later this year. The country’s finance minister sees many advantages to a CBDC, though it has a much more skeptical view of cryptocurrencies in general. The country has imposed a 30% tax on crypto profits.
As for the United States and the United Kingdom, both are conducting research into CBDCs. There hasn’t been too much in the way of development in this regard, but they are still in the very early stages.
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