The Central Bank of Iran (CBI) has informed banks and other financial institutions about its plans to impose regulations on digital Rial.
According to an insider report, the CBDC will involve the input of financial institutions that will allow them to implement features of smart contracts in collaboration with the central bank, which will be managing the currency.
The latest development has seen Iran join the league of countries working on issuing a central bank digital currency (CBDC). Accordingly, the Iranian Chambers of Commerce, Mines, and Agriculture disclosed on April 11 the central bank’s directive to banks and credit firms about the regulations on developing a digital Rial.
Iran Joins the CBDC Bandwagon
The new regulations on the CBDC have many critical points, like how to mint and distribute the central bank-issued token and the role of the central bank in the operations of the CBDC.
According to reports from the Chambers of Commerce, the network is subject to permission as it is expected to include authorized financial service providers capable of implementing smart contracts. The CBI is the only regulatory body that will decide the amount of the currency in supply.
Like other central bank-issued CBDC, the digital Rial is a digital replica of the national fiat currency of Iran and will be in circulation alongside fiat currencies.
An interesting thing about Iran’s CBDC is that it includes smart contracts. That means banks can implement pioneering financial services through smart contracts or can even use them to upgrade innovative existing legacy systems.
But then, most central banks worldwide are thinking of doing the same thing. However, very few have openly expressed their intention to adopt smart contracts in their respective CBDCs. It is worth noting that smart contracts can make finance more widespread, as seen in decentralized finance results (DeFi).
Meanwhile, it is widely reported that about 55 countries are currently working on integrating the Proof-of-Concept for CBDC, with a reported nine countries having launched the digital versions of their national currencies.
Analysts predict that more countries will soon join the movement, as is evidenced by the success of the various pilot programs and the general adoption of the CBDC.
CBDCs are Becoming a Priority for Central Banks
The interest in CBDC has been unprecedented, with various governments worldwide dishing out statements to reveal their plans for developing their own CBDC.
As rightly stated by the Iranian authorities, only a handful of countries have been able to launch their official digital currency successfully, and none is among the most significant economic players in the world. Going by the multiple tests of its digital Yuan, China is the closest among the big players, followed by India, the United States, and the United Kingdom.
Despite the lack of full implementation of the CBDC by top economies globally, the token is now at a stage where even opponents of cryptocurrencies are considering developing it for their countries.
The coming years will be another opportunity for more countries to implement CBDC.