Iran is toying with the idea of lopping zeros off its national currency as inflation goes through the roof. History tells us this is rarely a good idea. Cryptocurrency provides an alternative for those living in countries where the fiat currency is being rendered worthless. Crypto adoption in Iran is growing steadily, with government economic mismanagement credited with being a contributing factor.
Also read: Venezuela Wants to Use Petro to Finance Large Housing Program
Iran Edges Closer to Cutting the Zeros
Iran, crippled by an economic crisis, is proposing redenominating its currency, according to the country’s local media. “A bill to remove four zeros from the national currency was presented to the government by the central bank yesterday and I hope this matter can be concluded as soon as possible,” Iran’s central bank governor Abdolnaser Hemmati was quoted saying.
Many governments across the world have redenominated their currencies in a bid to save the economy. It was done in Brazil during a time when the country’s currency was being devalued by between 30 to 40 percent per month in the 1960s and 70s. Inflation still continued to rise. Zimbabwe, when suffering from hyperinflation, followed suit, though this initiative also proved fruitless. And most recently, Venezuela, now widely regarded as a failed state, last year shaved five zeros off its worthless bolivar. Once again, this doesn’t seem to have made much of a difference.
Iran’s government has toyed with the idea of debasing the rial for some time now. But 2018 was a particularly difficult year, with the national currency losing 60 percent of its value. This is in part to the U.S. reimposing sanctions on the country following the pull-out from the 2015 nuclear deal with Tehran.
As well as U.S. sanctions, years of economic mismanagement by the government has seen the country struggle, with the money supply increased by over 30 percent annually for over a decade, causing inflation to shoot through the roof and its citizens to suffer. The middle class in Iran has been brought down and its people have hit the streets in protest. But history tells us that lopping zeros off a currency doesn’t always do much good. Iranians who spoke to news.Bitcoin.com have said that bitcoin and cryptocurrency adoption, which is already growing in the country, will continue to rise.