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Central Bank of Iran (CBI) Announces Rial-Backed Cryptocurrency to Combat Adverse Impacts of Sanctions and SWIFT

Iran oil sanctions and Jamal Khashoggi’s saga are clear examples of the indisputable role geo-politics play in oil, and this is expected to impact oil price and volatility of Rial at a time when markets are just about balanced.

Since the US decision to place Iran under sanctions in May 2018, Iranian crude oil production has fallen remarkably. Compare this with Iran’s fall in production by 1.3 million bpd back in 2010 – 2013 during the previous US-led sanctions may lead one to reckon that further production shortfalls could be expected into 2019. This has an adverse impact on the Iranian economy with the Rial losing its value significantly amid rising inflation numbers.

With an objective of finding an approach to dodge the economic sanctions imposed by the US, in the recent past, that will further hit oil exports from Iran, the Central Bank of Iran (CBI) has made announcements to unveil a cryptocurrency backed by the domestic currency ‘Rial’.

Well, the Iranian Central Bank has now engrossed a local FinTech firm Informatics Services Corporation (ISC) in order to foster the solution.

Seyyed Abotaleb Najafi, CEO of ISC mentioned that the CBI intends to leverage new technologies to enhance banking system services, as per the sources. He also noted that the cryptocurrency, which is yet to be named, and would be issued by the regulator and will facilitate remittances in a distributed and one-to-one scenario without the interference of any institution.

Hence, with an intention of establishing the conducive IT infrastructure, central bank is assessing the productive use of blockchain and cryptocurrencies for improving payment services between different banks and in retail banking, as per Najafi.

Currency Strength Index: FxWirePro's hourly BTC spot index is inching towards -48 levels (which is bearish), while hourly USD spot index was at 125 (bullish) while articulating (at 06:45 GMT). For more details on the index, please refer below weblink:

http://www.fxwirepro.com/currencyindex

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