Iran to Launch Public CBDC Pilot on Kish Island
The Central Bank of Iran (CBI) is set to launch a public pilot for its national digital currency, the digital rial, aimed at domestic micropayments. Unlike other types of electronic money in Iran, the digital rial facilitates fund transfers between buyers and sellers without requiring interbank settlement.
The CBI officially announced the pilot scheme for the digital rial on June 18. The pilot, starting on June 21—the first day of the calendar month of Tir—will make the digital rial available to banking customers and tourists on Kish Island.
Kish Island: A Strategic Free Zone
Kish Island, the second-largest island in the Persian Gulf, spans 92 square kilometers and attracts approximately 12 million visitors annually. Operating as a free trade zone, Kish exempts tourists from many countries from obtaining visas. In 2021, Muhammad Javad Azari, a former minister of information and communications, proposed transforming Kish into a hub for domestic and international cryptocurrency exchanges.
Digital Rial Pilot Expansion
The public rollout on Kish Island is an expansion of the digital rial pilot program that began in 2023. During the pilot, bank customers and tourists can use the digital rial to pay for goods and services by scanning a barcode through special software. This digital currency offers an additional payment method alongside cash and bank cards.
”Unlike other types of electronic money commonly used in the country, which require bank accounts and common payment tools such as bank cards, the digital rial does not need interbank settlement to transfer funds between the buyer and the seller,” the CBI stated. The funds are transferred immediately upon transaction completion, simplifying payment processes and enhancing security.
Laying the Foundation for Micropayment Tools
One of the digital rial’s core missions is to support the development of Iran’s digital economy and address the evolving needs of the payment sector. The CBI highlighted the digital rial’s role in improving micropayments, stating it aims to increase resilience and stability in the country’s payment infrastructure, recreate the role of electronic banknotes in small payments, improve efficiency, develop new payment tools, and manage risks from the proliferation of private money.
So far, the digital rial has been used exclusively within Iran’s geographical boundaries to facilitate domestic micropayments. While the Iranian government allows the purchase and sale of cryptocurrencies like Bitcoin, it has banned their use for payments. Iran has regulated its local cryptocurrency mining market since 2018, with concerns from U.S. Senators like Elizabeth Warren that Iranian cryptocurrency miners could help the country bypass U.S. sanctions.
Featured image from: cointelegraph.com