The Central Bank of Iran seems hopeful about fulfilling the goals of the bank’s digital currency project, especially those related to innovating payment and monetary mechanisms.
Mohammad Beigi, head of the CBI payment systems department, said the crypto-rial venture initially seeks to help ease micro-payments, reduce the cost of interbank transactions and augment sustainability of Iran's e-payment network, way2pay website quoted him as saying.
The CBI wants to launch the digital currency project, known as the crypto-rial, by the end of the summer.
"The crypto-rial will be a blockchain-based type of currency, not a cryptocurrency. It will be issued by the CBI and can be used by the public for payments. It is not designed to replace other forms of money namely, banknotes," Beigi said.
The move also seeks to help improve financial inclusion and act as a powerful tool for the CBI to compete with other stable coins used globally.
The project is set to pave the ground for other innovative solutions, Beigi said.
"The possibility of using smart contracts could be named as a valuable achievement of the planned crypto-rial project…I'm certain that it will lead to innovative solutions beyond our expectation today."
A smart contract is a self-executing contract with the terms of the agreement between buyer and seller being directly written into lines of code.
The codes and agreements therein exist across a distributed, decentralized blockchain network. The code controls the execution, and transactions are trackable and irreversible.
The official noted that the CBI will soon publish the whitepaper of the project, which will address concerns of relevant experts.
Based on what is known about the CBI crypto initiative, the digital currency is not designed to compete with global cryptocurrencies. Unlike bitcoin and other cryptos, CBDCs are centralized, not anonymous and in accord with anti-money laundering requirements.
The digital currency is to be minted in a distributed ledger system, consisting of authorized financial institutions and capable of implementing smart contracts.
Distributed ledger technology (DLT) is a digital system for recording the transaction of assets in which the transactions and their details are recorded in multiple places at the same time. Unlike traditional databases, distributed ledgers have no central data store or administration functionality.
