Iran’s central bank digital currency (CBDC) is making significant progress after the recent completion of its pre-pilot stage, which the central bank says will usher in advanced studies.
The Central Bank of Iran (CBI) announced the successful completion of the pre-pilot stage at the ninth Annual Conference on Electronic Banking and Payment Systems. Gleaning from the CBI’s statement, the pre-pilot studies were carried out under supervision by the Monetary and Banking Research Institute (MBRI).
Results from the preliminary stages confirm a growing need for a digital rial to complement existing means of payment in the country. The CBI disclosed that the pre-pilot stage skimmed through legal, regulatory, and technological implications for an Iranian CBDC launch, giving the green light for advanced studies.
“The pre-pilot phase ended successfully with valuable achievements. The project will soon be launched in other ecosystems and will be used by more users,” Mani Yekta, CBI’s director for supervising payment systems, remarked.
The progress recorded by the Iranian banking regulator is coming on the heels of a widely anticipated visit from the Bank of Russia’s Governor Elvira Nabiullina that is scheduled for the coming weeks. With Russia and Iran already working on a gold-backed stablecoin, there are speculations that both countries could add cross-border functionalities to their respective CBDCs.
Work on the digital rial has been underway since 2022, when the CBI announced the start of a pilot. The CBDC project is said to run on IBM’s Hyperledger Fabric.
Like Russia, a wave of economic sanctions imposed by Western nations has forced Iran to speed up the development of a CBDC as it battles with the increasing “cryptoization” of its local economy.
The mad dash for CBDCs
CBDC development worldwide has been described as a mad dash, with over 100 nations indicating an interest in launching their own versions. Among the lot, China’s digital yuan has emerged as the most eagerly anticipated CBDC, given the extensive nature of its pilot and the impressive figures around it.
India’s CBDC development has kicked off without a hitch, with the central bank pledging to experiment with offline and cross-border payments. Other countries exploring the viability of central banks include Canada, Thailand, the Philippines, Russia, and Indonesia.
Despite the mad rush, critics have warned that CBDCs could spell dooms for commercial banks, affecting their ability to offer loans to customers as individuals convert their bank deposits to CBDCs.
To learn more about central bank digital currencies and some of the design decisions that need to be considered when creating and launching it, read nChain’s CBDC playbook.
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