Iran plans to digitize its currency soon. How does the digital riyal help circumvent sanctions? | Economy

About a year after the Iranian government decided to use digital currencies to import goods, the Central Bank of Iran announced earlier this week its intention to introduce the “digital riyal” to the market in the near future.

And the Governor of the Central Bank of Iran, Ali Saleh Abadi, said earlier that the digital riyal will replace the banknotes circulating among people until next September, and set the trial period for the offering of the national digital currency at 6 months, during which a committee composed of economists and bankers would diagnose the shortcomings To increase it before the final coin offering.

The announcement of the digital currency’s launch coincided with Iranian media reporting that the national currency was ranked second after the Venezuelan bolivar currency in the list of currencies of the lowest value against the US dollar, which provoked widespread criticism among Iranian circles has.

Increase financial transparency

In turn, the head of the Iranian Blockchain Association, Abbas Ashtiani, explained that there is no difference between the digital currency and the riyal currently available in the hands of people, emphasizing that the encrypted riyal will be used in public transactions similar to its digital circulation during the last period through credit cards and automatic teller machines.

He believed – in a press release – that the digital currency is an advanced step that will contribute to increasing financial transparency in the country, stressing that it is financial exchanges between the encrypted national currency and other digital currencies adopting blockchain technology, will facilitate.

Ashtiani explained that the digital riyal is one of the “stablecoins”. It differs in nature of cryptocurrencies in the cryptocurrency market, where the currency is offered The Central Bank of Iran is not a private company.

In light of the rampant inflation in Iran, we asked a question about “whether the digital riyal is aimed at confronting the collapse of the riyal” to the Iranian researcher in political economy Muhammad Islami, who replied in the negative and said has that the value of the digital riyal does not exceed its paper counterpart, and that the digital riyal will facilitate financial exchanges between people without the need for the mediation role that banks currently play.

The Iranian currency has lost about 25% of its value since President Ibrahim Raisi came to power in late August.

The Iranian government decided last year to use digital currencies to import goods (Iranian presidency)

Risks and challenges

Islami spoke to Al Jazeera Net and confirmed that the digital riyal was not the first of its kind in the world; Where there are other countries that have previously offered their national currency in digital form, adding that the presentation of the cryptocurrency is fraught with risks and challenges, and that the result of applying the experience in other countries has varied between success and failure.

The Iranian researcher believed that the project’s success rate was closely linked to the technological development of countries, adding that his country had advanced technology in blockchain and that it studied everything needed to secure its digital currency and prevent external parties manipulate it.

Although security concerns about cyberattacks will continue, Iran is not afraid to expose its digital currency to external manipulation, according to Islami, and that the price of the digital riyal is equal to the value of the national currency held by the Central Bank of Iran. guaranteed. .

Eslami pointed to the impact of financial sanctions on his country’s national economy, explaining that the digital riyal will develop foreign trade by facilitating direct exchanges without going through global financial systems.

globalization of exchanges

The Iranian researcher stressed the ability of the digital riyal to circumvent the economic sanctions imposed on Tehran; Especially the sanctions imposed on oil exports, which at the same time deny that the project came in response to foreign sanctions.

Earlier this year, the Iranian Ministry of Industry and Trade agreed with the Central Bank to adopt the use of digital currencies in foreign trade, and expected the move to achieve a 10% growth in non-oil exports.

Regarding the popular concerns related to the personal information of government users, Islami stressed that the relevant authorities in his country currently own all the personal information of bank account holders and their daily transactions, and that trading in digital riyals does not differ of previous financial exchange, but it is more transparent.

In turn, economic researcher Bashir Farhanian describes the presentation of the digital riyal as a step towards the globalization of financial exchanges, emphasizing the desire of new investors to trade financially through channels that are not subject to official government regulations.

Farhanian indicated in his speech to Al-Jazeera Net that for decades the world has become a cosmic village that requires an independent currency, emphasizing that the new riyal is nothing more than an electronic currency and a tool for financial exchange. and similar payments to banknotes, emphasizing that the digital riyal experience will simulate trading in digital currencies that It adopts blockchain technology.

The Iranian researcher concluded that his country, in the face of foreign sanctions, should launch educational campaigns on how to trade in digital currency, to circumvent the experimental stage and to promote its beleaguered economy through digital trading in its to adopt foreign trade.

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