Iran advances its digital rial pilot and Pakistan looks to create an eKYC banking platform
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(Kitco News) - The Central Bank of Iran (CBI) has announced the completion of the pre-pilot phase in its development of a central bank digital currency (CBDC) and now plans to advance the trial of the digital rial into the country’s payment system.
The Monetary and Banking Research Institute (MBRI), which is the research arm of the CBI, announced the end of the trial on Wednesday based on statements made by Mohammad Reza Mani Yekta, head of the CBI office for supervising payment systems, at the ninth annual conference on electronic banking and payment systems held in February.
According to Mani Yekta, Iran’s central bank now plans to increase the scope of the CBDC pilot to include the country’s payment system but doesn’t want to rush its implementation. “The pre-pilot phase ended successfully with valuable achievements. The project will soon be launched in other ecosystems and will be used by more users,” Mani Yekta stated.
The head of supervising payment systems went on to note that the rules governing a digital rial will align with those already in place for rial banknotes, adding that a digital rial would be distributed among individuals and banks via a CBDC infrastructure that includes blockchain features.
"Ten banks have applied to join the project. This gives us further inspiration about the project’s future," Mani Yekta said. Participant banks in the experimental phase included Bank Melli, Bank Mellat and Bank Tejarat, and all banks and credit institutions in Iran are reportedly expected to start offering electronic wallets for the digital rial in the future.
Planning for the digital rial project originally began in January 2022 and the CBI announced the CBDC pilot in September with the goal of improving financial inclusion in Iran and competing with global stablecoins. The CBDC reportedly runs on the Borna platform, which was developed using Hyperleder Fabric, IBM’s open-source enterprise blockchain platform.
The CBI is also in discussions with Russia to create a new stablecoin backed by gold that could be used as a means of payment in foreign trade settlements instead of the dollar, the Russian ruble, or the Iranian rial.
Pakistan approves blockchain-based national eKYC banking platform
In other crypto-related developments out of the MENA region, the Pakistan Banks’ Association (PBA) has signed off on the development of a blockchain-based Know Your Customer (KYC) platform with the goal of strengthening the country’s Anti-Money Laundering (AML) capabilities in a bid to counter the financing of terrorism.
According to a report from the Daily Times, the PBA, which is comprised of 31 traditional banks operating in Pakistan, signed off on the project to develop Pakistan’s first blockchain-based national eKYC banking platform on Thursday at the behest of the State Bank of Pakistan (SBP), the country’s central bank.
Included in the list of member banks are multiple international behemoths such as the Industrial and Commercial Bank of China, Citibank and Deutsche Bank.
The new blockchain-based eKYC platform – dubbed “Consonance” – will also reportedly improve operational efficiencies, which are primarily aimed at improving customer experience during onboarding.
Consonance will be developed by the Avanza Group, and the platform will be used by member banks to standardize and exchange customer data via a decentralized and self-regulated network.
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In December, Pakistan enacted new regulations related to the use of cryptocurrencies in the country, which included laws for Electronic Money Institutions (EMIs) as part of its goal to issue a digital Pakistani rupee (PKR) by 2025. EMIs are non-bank entities that will be licensed by the SBP to issue e-Money for the purpose of digital payments.
The new regulations – which were developed in conjunction with the World Bank – establish a variety of requirements that money transmitters must follow, including rules related to outsourcing activities, anti-money laundering and counter-terror financing measures, consumer protection, complaint-handling mechanism, oversight and regulatory reporting.
Jameel Ahmad, Deputy Governor of SBP, called the release of the new regulations “a testament to the SBP’s commitment toward openness, adoption of technology and digitization of our financial system,” and added that the central bank is transforming itself into a modern, digital and technology-oriented bank.