Toman and new rial proposals of Central Bank of Iran evaluated

Business Materials 16 April 2019 15:49 (UTC +04:00)

Baku, Azerbaijan, April 16

By Elnur Baghishov – Trend:

According to the new national currency project proposed by the Central Bank of Iran, the current 10,000 rials will be equivalent to 100 new rials, Trend reports referring to the website of the Cabinet of Iran.

According to the report, the economic committee of the Cabinet of Iran is currently evaluating the project on removing 4 zeros from the national currency.

According to the proposal of the Central Bank of Iran, Iran's national currency will be renamed to toman. Each toman, to be issued as paper currency, will be equal to the current 10,000 rials and 100 new rials, to be issued as coins.

With the implementation of this project, the work on cash payment in local currency exchange will be simplified and restored.

At the same time, the cost of issuing banknotes and sukuks (equivalent to bonds in Islamic banking) will be reduced. This will reflect the usefulness of the new monetary system in the coming years, and the national currency's equivalence with global currencies will have a positive psychological impact in a short time.

Problems with dangerous inflation and the decline in national currency, as well as the considerable increase in the number of banknotes in circulation, the use of large digits in regular daily purchases, the depreciation of the national currency from the economic turnover, the lower prestige of the national currency in comparison to other foreign currencies, and the currency’s official name – rial – remaining out of usage, have led to problems with it getting substituted with an unofficial name – toman.

Moreover, the high consumption of banknotes (due to being saved in large amounts), the costs of issuing and destroying banknotes, as well as the high consumption of ATMs are among the negative consequences of the national currency having a low value.

The Central Bank of Iran has offered to move from rial to toman during a 24-month transition period. During this period, old banknotes and metal coins will be collected and replaced.

Once the date is announced, the toman will replace rial as the national currency of the Islamic Republic of Iran.