“If issued, the crypto-rial could be used for small cashless transactions…it helps us reduce money circulation and can be used for interbank settlement,” the CBI website quoted Mohammad Reza Mani Yekta as saying.
The CBI said earlier that it was trying to develop a national cryptocurrency to promote financial and payment services in the domestic banking industry at the inter-bank and micro-banking levels.
However, the official made clear that the crypto-rial is a digital form of money to be circulated by the central bank, not a cryptocurrency.
“We are studying different aspects to come up with the most efficient model in the national interest. We need to have a clear understanding about the usage of CBDCs, as mentioned in the International Monetary Fund’s proposals so that we can come up with the most efficient policies.”
The IMF has published several reports exploring the benefits, risks and challenges of issuing CBDCs.
CBDCs will boost competition, reduce transaction costs, expand access to services and encourage financial participation via mobile devices, according to the IMF. But it added that it can also reduce the ability of local governments to conduct monetary policy and control domestic financial conditions.
However, “without appropriate measures, foreign CBDCs could facilitate illicit flows,” it said, adding this will make it difficult for regulatory authorities to enforce exchange restrictions and capital flow management measures.
“We are also doing feasibility studies over the issuance of CBDCs,” Mani Yekta said, adding that “central bank digital currencies are in their infancy being tested by central banks across the globe.”
The Bank of Canada, European Central Bank, Bank of Japan, Sveriges Riksbank, Swiss National Bank, Bank of England, Board of Governors of the Federal Reserve and Bank for International Settlements have collaborated on a report setting out common foundational principles and core features of a CBDC.
The principles emphasize that, in order for any jurisdiction to consider proceeding with a CBDC, certain criteria would have to be satisfied. Specifically, authorities would first need to be confident that issuance would not compromise monetary or financial stability and that a CBDC could coexist with and complement existing forms of money, promoting innovation and efficiency.
Yekta referred to the current state of the economy noting that the CBI has not made any decision about launching the crypto-rial. He implied that the CBI prefers to introduce the new form of rial after the economy is back on its feet and the public are familiar with the CBDC and its benefits.