Majlis Slashes Four Zeros From National Currency
IRAN NEWS ECONOMIC DESK
TEHRAN – Majlis yesterday passed a bill allowing the government to slash four zeros from the rial, after a sharp fall in the value of the currency.
Under the approved bill, Iran’s national currency will be changed from the rial to the Toman, which is equal to 10,000 rials.
The bill needs to be approved by the Guardian Council before it takes effect.
Iran’s state TV said the Central Bank of Iran will have two years to “pave the ground to change the currency to Toman”.
Addressing to the open session of Majlis in defense of the bill, the governor of Central Bank Abdolnaser Hemmati said that because of the inflation in the past five decades, rial and dinar have lost their stamina and actually toman has replaced them in the society and people use toman in their daily trades and they even equals 50 tomans to 50,000 tomans.
On the cost of destroying old banknotes and printing new ones, he said there are some eight billions of banknotes circulating in the country and five billions of them are banknotes with value less than 2,000 tomans and by this approval and cutting four zeros, the bank can circulate one- and two-toman coins.
Hemmati reiterated that currently the bank destroys one billions of banknotes annually which its annual cost is around 400b tomans.
He reiterated that protecting the reputation of the national currency is very important, adding that currently the gap for changing rial with currencies like dollar and euro is very high. He admitted that the ration between national currency with dollar is 0.000006 which is a very weak one in the world.
Hemmati added that cutting the zeros will revive usage of coins in the country, adding that currently the per capita of banknote in the country is 102 and the figure for the coins is just 26 while the per capita of coins in other countries is three times more than Iran.
He once again reiterated that cutting zeros has no impact on inflation and they are other factors which are crucial in inflation.
Hemmati reiterated that replacing the current banknotes with the new ones will be gradual while both rial and toman will be valid during the transition period. After that phase, all financial commitments based on the rial will be fulfilled in toman, he stressed.
The idea of fewer zeros has been floated for almost 16 years. The initiative to change the currency was first proposed by the government in August.