Iran prepares cryptocurrency as US cuts SWIFT services

According to the US Treasury Department, Iran has now been cut off from the SWIFT financial messaging system.  Photo: iStock
According to the US Treasury Department, Iran has now been cut off from the SWIFT financial messaging system. Photo: iStock

Tehran feels forced to turn to crypto and will start to issue ‘digital Rial’ to banks and institutions for payment testing and interbank settlements

November 13, 2018

Iran has now been cut off from the SWIFT financial messaging system, according to the US Treasury Department.

International import and export payments, in addition to personal banking, have now been hampered in the Islamic Republic as the Trump administration strong-arms the Brussels -based financial service provider.

The severance has been planned for a couple of days but actually took place this week, RT has reported. US Treasury Secretary Steven Mnuchin said the move was “the right decision to protect the integrity of the international financial system.”

The Society for Worldwide Interbank Financial Telecommunication (SWIFT), touts itself as the global provider of secure financial messaging services. The organization has traditionally been seen as an independent entity. However, this latest move has shown its centralization and loyalty to the US, which evidently controls the global banking system.

US Secretary of State Mike Pompeo had warned SWIFT that there would be “penalties applied” to firms that do not comply with the latest round of sanctions. Stuck between a rock and a hard place, SWIFT could now face EU penalties for siding with the US and violating its own Joint Comprehensive Plan of Action (JCPOA) laws prohibiting companies siding with sanctions.

What is likely to occur is European, Russian and Chinese lawmakers developing their own banking and finance protocols that can’t be overturned by the US so easily. Distance from the dollar has already been called for with economists and educators, including economist at Kingston University, Professor Keen, stating: “The sooner the rest of the world develops an alternate payments system – possibly working through SWIFT, but using a basket of currencies as the basis for a supra-national unit of exchange – the better.”

RT commentator Max Keiser added: “The US puzzlingly seems to want to expedite global de-dollarization with its ill-advised weaponization of SWIFT.”

Iran, meanwhile, is stuck without means of banking outside of its borders.

Anticipating this, as reported by Asia Times last week, Tehran has turned to crypto. Local media has reported that a national stablecoin backed by the state has been developed by Informatics Services Corporation at Central Bank of Iran’s request.

The new digital Rial is currently still in the pilot phase of final testing. Initially, it will be issued to banks and financial institutions for payment testing and interbank settlements. Iran will be the first of many nations seeking to distance itself from the dollar and those who control it as US sanctions get spread around like they’re going out of fashion. It may also be one that starts hoarding Bitcoin and gold as a stable alternative.

asiatimes@southasiajournal.net'
Asia Times
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