Sanction-hit Iran is negotiating the use of its state-backed cryptocurrency with eight foreign countries, according to a Tehran Times report.
The Middle Eastern nation had its representatives met with their counterparts from Switzerland, South Africa, France, England, Russia, Austria, Germany, and Bosnia. According to Mohammad-Reza Modoudi, the acting head of Iran's Trade Promotion Organization, the meeting took place in hopes to lure foreign investors into the country.
At the same time, the representatives also discussed how Iran would settle its global trades while hit by an international banking sanction. Digital Rial, as Tehran Times reported, was Modoudi's response.
Circumventing US Dollar
The meeting between global representatives took place at the time when western nations began favoring Iran.
On January 29, 2019, the European Commission said that it would create a Special Purpose Vehicle (SPV) to assist European countries in bypassing the US sanctions to work with Iran. The UK, Germany, and France led the efforts to remove the US Dollar from the equation as they import natural gas from the oil-rich country.
The move came after the Trump administration arm-twisted SWIFT, the global banking protocol for cross border payments, to sever ties with Iran's central bank. The administration also ordered its allies to stop doing business with Iran which crippled Iran's oil, shipping, gas, and financial industry.
But now, with the European Commission taking an active stand in favor of Iran, the US is threatening to go after its own allies.
“The choice is whether to do business with Iran or the United States,” Rep. Sen. Tom Cotton told the Associated Press. “I hope our European allies choose wisely.”
— Confluence Intel (@ConfluenceIntel) January 30, 2019
Amidst the growing uncertainties among western nations, Iran took the opportunity to pitch an alternative intergovernmental financial network that would bypass the US Dollar.
Anti US Sanction Group
Iran's Crypto-Rial expects to gain momentum among the nations that are also under the US sanctions. The Blocking Iranian Illicit Finance Act, introduced by US Senator Ted Cruz, mentioned China, Russia, Turkey, and Venezuela as potential countries that might aid and adopt Crypto Rial. Russia President Vladimir Putin also indicated that they were "actively working" with Iran to establish independent financial systems.
On November 14, Iran signed a bilateral blockchain agreement with Russia and its neighbouring country Armenia.
The move also comes as a reminiscent of a global economic power shift initiated by China. President Xi Jinping said in October 2017 that China would prioritize the internationalization of Yuan. A year later, the European central bank exchanged $611 million for the Chinese currency. It was a small shift but nonetheless, it proved that Chinese Yuan was beginning to break the hegemony of the US Dollar.
Meanwhile, China is also developing a central bank-backed digital currency. On the political front, it remains in a trade-war with the Trump-led US.