Can Cryptocurrency Become Fiat Currency? An Answer is Given by Iranian Government

The crypto-rials will be minted by the Central Bank of Iran, and the institution will decide the maximum supply of the currency.

The Central Bank of Iran (CBI) has said that it issued a notification to domestic banks and credit facilities about the regulatory framework for Iran’s central bank digital currency (CBDC) dubbed crypto-rial.

Iran launching crypto-rial

A recent report highlighted the rules that will be followed to mint and distribute digital currency. The crypto-rials will be minted by the Central Bank of Iran, and the institution will decide the maximum supply of the currency.

The report further describes the issuance process of this digital currency. It states a distributed ledger system that includes a list of the authorized financial institutions and describes how smart contracts can be adopted for the project.

Earlier statements from the CBI describe how the crypto-rial will become the new currency in Iran. The report notes that the currency would be used similarly to banknotes and coins, adding that the process would be entirely digital.

Past publications discussing this CBDC claim that it will not compete with other global digital currencies. It will also be the central bank’s responsibility to authorize the institutions that will be part of this system and assess the effects of the new currency on the economy.

The reports have not talked about wallets and the transaction fees charged to those who use the CBDC. The initiative will also bring financial inclusion and allow the CBI to have a competitive advantage against other global digital currencies.

The launch of this national currency is part of the automation of the local banking system and payment service networks. In 2018, the Informatics Services Corporation (ISC) was empowered to create a new national cryptocurrency. It was not until January that the CBI announced plans for a CBDC project.

CBDC development plans

CBDC plans globally have been shaping up, and different countries have announced plans to launch their own CBDCs. The Bank of Jamaica recently announced plans to test a prototype CBDC under a financial regulatory sandbox.

The government has already launched the testing phase for the digital yuan in China. The launch of the digital yuan has created speculation that it could replace the US dollar. The US is still behind in plans to launch a digital dollar.

(Article Courtesy of Invezz)