“The change in the monetary unit has been in the making for a long time and is still ongoing,” Hadi Akhlaqi, CEO of Bank Mellat, said in reference to the government’s recent decision to approve changing Iran’s monetary unit from rial to toman, which will lop off one zero from the current national currency.
The decision was made when ratifying the Central Bank of Iran’s bill during a Cabinet meeting in early December and awaits parliamentary approval.
“People usually use toman in their dealings and rial is practically eliminated, therefore the advent of toman has already occurred and now the government only seeks to make it official,” Akhlaqi was quoted as saying by IBENA, a news website close to CBI.
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, as growing inflation over the decades had made the use of rial inconvenient.
Officials have insisted that the proposed shift to toman should not be considered currency revaluation, as it is set to help ease money transactions for the public and respect societal norms, Financial Tribune reported.
On the potential repercussions of a currency switch for the Iranian economy, the bank chief assured that the measure will be implemented in a way to have the least impact on economic stability. He added that the new notes must be issued gradually and “the costs will not be significant”.
“The change in the monetary unit paves the way for the issuance of banknotes with higher denominations. The central bank has been looking to issue larger denomination banknotes and as far as I know, the new and big denomination bills have already been designed,” he said.
Currency Revaluation
Akhlaqi pointed out that the currency change proposal has seemingly had no significant impact on the country’s monetary variables, but it may exert a psychological effect that will not be negative.
The chief executive voiced support for proposals calling for the monetary switch alongside a proper currency revaluation.
This, he says, will reduce costs and save the people the hassle of dealing with multiple changes.
“I believe in this because the monetary unit change will entail costs for the country and if we are to have currency revaluation, it can be done at the same time as the monetary unit change,” he said.
Noting that the monetary change will see one zero dropped from the national currency, Akhlaqi added that the possible ensuing revaluation will lop off more zeroes, but a decision must be made regarding the exact number of zeroes that could be removed.
In recent years, many officials and pundits have stressed the benefits of dropping three to four zeroes from the Iranian currency.