Gov’t OKs “Toman” as Iran's Currency Unit
The government has approved changing Iran’s monetary unit from rial to toman, which will lop off one zero from the current national currency rial.
The decision was made when ratifying the Central Bank of Iran's bill during the Cabinet meeting on Wednesday, which was presided by President Hassan Rouhani, the government’s news website Dolat.ir reported.
While rial has been used as Iran's monetary unit in official documents and budget statements, toman was being used more commonly in daily transactions by citizens. The government will send the bill to the parliament for final approval.
Prices of goods are mostly marked in rials, 10 of which equal one toman.
The government and Central Bank of Iran aim to ease financial operations as the duality of monetary units has been causing confusion among people. The move would also reduce the cost of money printing and maintenance.
Toman has been used as Iran’s currency for a long time. Between 1798 and 1825, the toman was subdivided into 8 rials, each worth 1,250 dinars, according to Wikipedia.
In 1825, the qiran was introduced, worth 1,000 dinars or one-tenth of a toman. In 1932, the rial replaced the toman.
Plans for changing the national currency unit was first considered by the previous administration. The Central Bank of Iran even asked the public to suggest names for a new currency unit during the previous administration.
The plan will result in dropping a zero from the national currency, whereas there has been much talk about removing three or four zeros from the rial in the past few months.
Revaluation of the national currency could help boost its efficiency and ease daily transactions, according to experts.
Last month, Economy Minister Ali Tayyebnia said the time was not ripe for revaluating the national currency, as it requires more stability in the economy. However, he favored the idea in general, saying that it was necessary.
In the absence of any perceptible sign of government intention in this regard, the sudden announcement on Wednesday came as a surprise.
However, the implementation of the plan could prove a costly and time-consuming one, if the government decides to replace the current banknotes with new ones.
Experts have pointed out that the government is better off removing three or four zeros from the national currency, considering the probable cost of a revaluation plan in future.
Pouya Jebel Ameli, an analyst with CBI, thinks that the issue should have been reviewed more closely, before the Cabinet passed it.
“Stability in the rate of inflation is a prerequisite for implementing currency reforms,” he said.
“New banknotes must be printed, if the parliament approves the plan,” he added, stressing that more zeros need to be dropped.
Valiollah Seif however took to the instant messaging telegram app later in the day, announcing that the plan should not be considered as currency revaluation proper, “It is set to help ease money transactions for the public.”
“Currency revaluation has been fully studied by the Monetary and Banking Institute,” he said, “We have identified all the prerequisites needed for implementing reforms in the national currency, stable single-digit inflation being one of them.”
Toman was not the only issue discussed by the Cabinet on Wednesday. It also allowed CBI to import and export gold tax-free and without the government's permission.
The proposal, also included in the Central Bank Bill, aims to help CBI manage its assets.
The bill has been crafted to upgrade and modernize banking regulations. Improving the independence of CBI, enhancing monetary policymaking and CBI’s supervision over the money market are among its key goals.
The Central Bank Bill is set to improve the regulator's independence in various aspects. The bill is expected to be delivered to the parliament along with the Banking Reform Bill that aims for a comprehensive reform in the banking sector by making it more compatible with international standards and Islamic finance principles.