Iran Close To Shifting Rial To Digital Currency Due To Sanctions


Iran is about to launch its Rial digital currency, which is being developed by the Informatics Services Corporation. According to the agency’s CEO, Seyyed Abotaleb Najafi, the coin will support Iran’s fiat.

As things stand, the Western Asian nation has been blocked from the Society for Worldwide Interbank Financial Telecommunication (SWIFT) monetary system and is currently in a race to find a solution to its global financial network connectivity issues. This is following a flurry of sanctions by the United States government targeting its financial institutions and trading networks.

Right now, embracing cryptocurrencies seems to be a viable way to circumvent the imposed sanctions. The latest round of sanctions was enacted on November 5 through the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) and targeted over 700 Iranian citizens, companies, aircraft and vessels.

The sanctions are related to the nation’s nuclear activities and many had previously been outlined under the Joint Comprehensive Plan of Action (JCPOA). The plan was designed to force the country into abandoning its nuclear and ballistic missile programs and impede the regime’s ability to fund countermeasure activities.

According to a statement issued by Treasury Secretary Steven Mnuchin, maximum pressure is going to be exerted to prevent the Iranian regime from shifting currency reserves into unreachable overseas investment markets.7

Image Credit:AP/Ebrahim Noroozi

The Development of a National Digital Currency

Iran is said to be hastening the launch of its national cryptocurrency, backed by its national currency, the Rial. According to Ibena, a local news source, the digital coin is being developed by the Informatics Services Corporation at the request of the country’s Central Bank. The digital currency will apparently be distributed by the Central bank on a one-to-one framework.

The system is reportedly in its pilot stage and testing is taking place to evaluate its capacity to connect banks and retail financial institutions. According to Informatics Services Corporation CEO, Seyyed Abotaleb Najafi, the digital coins will directly support the country’s fiat currency. Liquidity will be limited by blocking each digital unit upon receiving its fiat equivalent, thereby creating less of it.

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