The Central Bank of Iran is launching a pilot project for the digital rial on Kish Island: programmability among the features of the CBDC.
On June 18th, the Central Bank of Iran (CBI) announced the launch of a pilot project for the release of its CBDC, the digital rial, scheduled for July on the island of Kish. According to the central bank, the project aims to improve the payment infrastructure and introduce innovative payment instruments.
Project details
The pilot project envisages that customers of banking networks and tourists will be able to use the official wallet to make purchases and transfers by scanning a barcode. Unlike classic bank transactions, the digital rial allows direct payments between the customer and the merchant without intermediaries.
Two private banks, Mellat Bank and Tejarat Bank, will participate in the trial phase, which will take place in the free zone of Kish Island. This area, inhabited by around 140,000 residents and frequented by 12 million tourists annually, represents a suitable environment for testing the CBDC according to the central bank. The success of the pilot program could lead to the expansion of the digital rial nationwide.
The CBI stressed that one of the main features of the CBDC is its programmability, a function that opens up new possibilities such as introducing an expiration date for the money in the wallet or limiting the purchase of certain goods or services.
Local context
Iran began working on its CBDC in 2021, testing the currency among banks and stores in 2022, before launching an initial trial period in 2023. Discussions also include the use of CBDCs for cross-border transactions. For example, according to some reports, Iran and Russia could use their digital currencies to circumvent international sanctions.
As for the approach to the digital asset world, Iran generally remains opposed. Currently, local financial institutions are not authorized to operate with cryptocurrencies, although the p2p market remains active.
