With the increasing acceptance of crypto across the world, more governments are working on ways to get into this arena. Many central banks have created digital currencies tied to their legal tender. This step is intended to give citizens a safe way to invest while offering another method of payment.
Iran is the latest country to jump on the digital currency development bandwagon, following in Venezuela’s footsteps. Both countries are struggling to stay afloat because of US sanctions for different reasons. Iran’s information minister Mohammad Jahromi announced his country’s interest in developing crypto via a tweet. The reason to do so is the belief that a CBDC will go a long way in resolving problems stemming from US sanctions. According to some observers, Iran’s CBDC could be a solution to the country’s corruption problems.
Allegations of corruption have been part of Iran’s political landscape for years. To highlight this point, Transparency International’s Index on Corruption Perception has Iran scoring 25/100. Iran’s attempts to digitize currency started in 2018. The country’s central bank charged the Informatics Services Corporation to set up a pilot project and eventually create a CBDC. Details are sketchy and little information other than the basics is available.
In fact, Iran was among the first in the world to make Bitcoin mining legal. This step was taken with the intent of reduce crippling financial problems that beset the country. Lack of steady electricity supply and droughts put a temporary halt to the country’s mining activity. Iran’s Energy Ministry has been working hard to stabilize power supplies and ensure even distribution.
In early 2020, Iran did issue 1000 licenses for crypto mining to help it manage in international trading. Adopting CBDCs seems like a good way to get back on a firm footing and pay for international trades with crypto.