Majlis of Iran has decided to replace the national currency
The other day the Majlis of Iran approved the bill, which suggests denomination of the national currency. Now the new money of the country will be called the toman and it will replace the rials. There is an active preparation for changes, a number of processes are being rebuilt.
It will be possible to exchange the old currency for the new one – for 1 toman it is necessary to pay 10 thousand rials. As a result of denomination, the face value of Iranian money will decrease by 4 orders of magnitude.
The changes will be made in several stages, the first of which will last 3 years. It is a parallel circulation, when it will be possible to use both toman and rials. And the Central Bank of Iran should prepare everything necessary for the transition period. The country’s main regulator is given two years for this purpose.
It should be noted that the Central Bank introduced a law on currency change to the Majlis back in 2016. The draft monetary reform has been discussed, agreed and changed for a long time.
Tomans aren’t exactly new money. They were already used in Persia until 1932, and were replaced by rials. Now the Central Bank has decided to go back to the old currency to simplify the financial calculations. The fact is, the tomans were still unofficial money. Despite the fact that the rials were officially accepted, the people of Iran used the name toman in their daily lives, which brought a number of inconveniences and a traveler.
The rituals of recent years have shown cheapness, which has also led to its replacement. For example, 3 years ago the rate of Iran’s national currency against the dollar was 37 thousand, and in 2019 one dollar was already worth 180 thousand reals. Such a collapse was caused by Donald Trump’s statement about the withdrawal of the United States from the nuclear agreement. This agreement has been in force between Washington and Tehran since 2015. In addition, sanctions have been renewed against the eastern country, which significantly affected its economy. This situation has caused panic among the residents of Iran, and there were huge queues near the currency exchange points. In order to stabilize the situation in the country, the parliament introduced a number of tough measures, arrests of the owners of exchangers, who had no license, began, and the accounts of currency traders were frozen.
At the moment the dollar costs about 120 thousand rials, although the official rate in Iran is 42 thousand rials per unit of the American currency. People who don’t have bank cards have to carry huge wads of money to make payments in shops and pay for services. Therefore, the reform proposed by the Central Bank is necessary for the country and the normal functioning of its economy.