SWIFT, a company which offers secure financial messaging services, has removed the Central Bank of Iran (CBI) from its financial banking system. In response to the U.S.-led sanction, Iranian authorities have expedited the creation of their planned state-sponsored national digital currency.
In a November 9 report by local news outlet Ibena, Informatics Services Corporation (ISC), CBI’s private tech division, has confirmed that they have developed the so-called Crypto-Rial. Seyyed Abotaleb Najafi, the CEO of ISC, states their cryptocurrency is expected to abolish the role of international financial settlement companies like SWIFT. The digital currency will be utilized in a distributed or one-to-one structure for transferring funds without the need for mediators.
Najafi thinks that the reason for the development of the Crypto-Rial is much deeper than just evading U.S. sanctions. The ISC CEO says that the pilot program will test the ability of Blockchain and crypto technology in handling a financial system on both the interbank and retail levels.
He further explains that the country seeks to release the Crypto-Rial on Iranian commercial banks anytime, which will allow them to utilize the token as a payment instrument in transactions and banking settlement. Najafi discloses that the underpinning value of the digital rial will come from its fiat supply.
Najafi states that during the distribution of the Crypto-Rial to the country’s commercial banks, they are set to block an equivalent value of the conventional rial in the CBI account, which will result in 1 is to 1 peg between the crypto and fiat version.
On the other hand, the international foreign exchange value of Rial (by default) will remain tied to Iran’s dollar reserves. A genuine independent change will most likely to come if countries all over the world will agree to conduct international transactions with Iran using the Crypto-Rial.
In an interview with RT, stockbroker Max Keiser says that blockchainization of state-supported fiats will subsequently lead to the eradication of the dollar, adding:
“The US puzzlingly seems to want to expedite global de-dollarization with its ill-advised weaponization of SWIFT,” in reference to the increasing dissent against the U.S. dollar among the world’s biggest economies like Russia and China. These two countries are now in the midst of creating an alternative to SWIFT, not to mention acquiring hundreds and tonnes of gold as reserves against the dollar.
Although an alternative settlement protocol may facilitate import and export channels between countries covered by the U.S. sanctions, gold reserves will give economies major support to their ailing national currencies.
Keiser states that Iran is now faced with a short-term “drastic problem” and advises that it needs to follow Russia and China’s footsteps by boosting its gold reserves or even resorting to the use of Bitcoin, a cryptocurrency which remains untouched by the macroeconomic financial factors. He further states:
“Iran needs to get smart and start hoarding Gold and Bitcoin if it wants to avoid the worst of the fallout.”
Keiser tells RT:
“It is already, smartly, pursuing bilateral energy deals outside of the $USD, but it needs to add value to its currency with reserves of Gold and Bitcoin.”
Despite this, trading of Bitcoin and other cryptocurrencies is still prohibited in the country.