Iran Finishes Development of Central Bank Digital Currency
A couple of months ago, the Iranian Government issued a report stating that they are working on their very own central bank-backed digital currency. At the time, it was mentioned that the coin’s purpose would be to stimulate the national economy, while also circumventing economic sanctions imposed by the United States.
Recently, the U.S. imposed yet another sanction, hence making Iran unable to access the SWIFT cross-border money transfer system. In response, the Iranian government announced that the development phase of its national digital currency is now finalized.
As such, it seems like the tech company in-charge with developing the central bank digital currency, Informatics Services Corporation, has finished development, and is now awaiting new instructions from the Iranian Central Bank. Once the go-ahead is given, the tech company will begin beta-testing the project, by issuing cryptocurrency to several banking institutions. So far, it has been reported that the coin can be used to make payments, but it can also handle interbank monetary settlements.
In a recent press statement, the CEO of the Informatics Services Cooperation announced more information about the new coin. With this in mind, it’s built using a distributed architecture, and employs a one-to-one framework for processing payments. According to him, the coin “Has primarily been developed to explore the capability and usefulness of digital coins and the blockchain technology that underpins them in facilitating financial payments, bank-to-bank settlements and retail banking”.
When asked about the testing phase, the CEO mentioned that “In the first phase, the blockchain banking infrastructure will be granted to Iranian commercial banks to use it as a token and payment instrument in transactions and banking settlement.”
Just like some of the other government-backed cryptocurrencies, the Iranian coin, which has not been named yet, will be backed by the country’s national currency – the Iranian rial. It is important to mention that central bank-backed digital currencies are quite different from traditional cryptocurrencies, as they are not decentralized, and cannot be held as an asset for profit purposes. As such, they’re simply digitized versions of fiat currencies that will mostly be used by the government and banks. In many cases, citizens can use these coins as well, but their utility is still being discussed.