The Central Bank of Iran says it will make the CryptoRial, a central bank digital currency, available to the public within two weeks.
Peivast Magazine on Thursday quoted an official from the CBI, who said that the project has already past its pilot stages and is set to be launched on February 7.
According to the official, Bank Melli, Bank Mellat and Bank Tejarat were involved in the experimental stages of the project. All banks and credit institutions are to start offering electronic wallets for using the new form of national currency.
Bank Melli and Bank Mellat have started selling limited amounts of crypto-rial and also accept the crypto-rial.
The Money Reserve Supervisory Board has approved 10 billion rials of Crypto-Rial be minted for use in the pre-pilot phase. This is expected to increase by the time the pilot phase is ready for launch.
The CBI has said that it has in place infrastructure for the crypto-rial that is planned as a new type of national currency, like banknotes and coins, but fully digital.
Based on what is known about the CBI crypto agenda, 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 move seeks to help expand financial inclusion and function as a powerful tool for the CBI to compete with other stable coins globally.
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 details are recorded in multiple places at the same time. Unlike traditional databases, distributed ledgers have no central data store or administration functionality.
The CBI earlier provided some details about the project in a draft of a Crypto-Rial whitepaper. Even though the document contains valid information it does not really address concerns raised by economists and the experts.
The CDBC is set to be used for micropayments inside the country, but analysts say businesses are not prepared to accept the new national currency. Moreover, users' familiarity with digital wallets and its security must be promoted before plan is implemented.
At the macro level, experts have expressed anxiety about the potential negative impact of the Crypto-Rial on banks.
"Basically banking is a business of financial intermediation…implementing large projects would weaken the role of banks in financial intermediation; it would also impact their assets and lending power and ultimately multiply their losses," Ahmad Azizi, a former CBI deputy chief said, Tejarat News reported.
"It seems that the CBI has not fully explained the project to experts as no bank so far has made any statement to this effect," Azizi noted.
Market analysists, developers and e-commerce experts met recently to assess the CBI document on the Crypto-Rial. A glance of their stances and statements confirms Azizi's position about the ambiguities surrounding the project and CBI's inability or unwillingness to set the record straight.
Mehran Moharramian, the deputy for innovative technologies at the central bank, said earlier that the CBI's primary aim in developing the Crypto-Rial is to create a new programmable form of currency, known as open money. "This means that money will be equipped with smart features and be multipurpose. A key feature will be close monitoring of how bank loans are used, which is almost impossible with the existing national currency, the rial."
Abbas Ashtiani, head of the Iran Blockchain Association, has also expressed reservations about the central bank’s approach to blockchain technology.
"The technology is capable of providing a wide range possibilities and features. However, we need to see how the CBI intends to use the new technology, which features or aspects would be used and which will be blocked," the Persian-language journal Peivast quoted him as saying.
On the other hand, there are experts who support the CBI plan. Nima Amir Shekari, an e-banking expert, said the CBDC project would help the central bank, as the regulator, learn more about cryptos.
"Central banks can later draw on their experience to propose workable regulations about cryptocurrencies and crypto assets.”
