Toman: New Iranian Currency
The intention, among other things, is to facilitate transactions,
cut the cost of printing banknotes and coins, and enhance the efficiency
of the monetary system.
The plan to remove four zeros from the Iranian national currency is on the
government agenda, again. The oft-mentioned move was proposed in the past by
Central Bank of Iran (CBI) as part of a broader plan to revisit the monetary
The measure calls for fundamental change to the national currency, including
changing the name of the monetary unit from the official rial to the
popularly used ‘toman’. It stipulates change in the nominal value and the
face of bank notes and coins, the government website dolat.ir reported.
“The new national currency toman will be defined to substitute the rial.
Each toman will be equivalent to 10,000 rials,” the website said.
Despite the fact that rial is the official currency, people use toman in
informal transactions (1 toman = 10 rials).
According to the website, the redenomination is being discussed in the
Cabinet and the economic commission of the government is conducting
The concept was first floated in January by CBI Governor Abdolnasser
Hemmati in a meeting with a group of lawmakers.
Hemmati said the CBI had proposed to the government the lopping off four
zeros from the rial. If approved, the proposal should go to the Parliament
to become law.
The intention, among other things, is to facilitate transactions, cut the
cost of printing banknotes and coins, and enhance the efficiency of the
Galloping inflation and rapidly declining purchasing power, the ballooning
volume of banknotes in circulation, hassles of using large digits in
financial transactions, the fading facial prestige of the rial against other
currencies, and popularity of the toman among the masses are seen as other
motives behind the plan.
The notion of getting rid of zeros from the fast tanking rial has appeared,
disappeared and reappeared time and again over the years.
The government sent a measure to the Majlis in 2016 to this effect and as
part of a CBI bill to drop one zero. Nothing happened.
Comparing the inflation rate as measured by Consumer Price Index in the
previous fiscal year (2018/19) with numbers reported for inflation half a
century ago, the government website said the index has grown 2,743 times.
This is while the biggest banknote, the 500,000-rial ‘Iran Check’ has grown
only 50 times in comparison to the biggest banknote (10,000 rial) of
“The [nominal] value of the banknotes has not been adjusted in proportion to
the inflation rate,” the report added.
The CBI has proposed two years as the transitional period for the currency
change. After coming into effect, toman will take the place of the rial as
official currency and all the official papers and contracts based on the
rial will be redrafted.
The website forecast possible effects of the measure on economic variables
such as the inflation rate, bank deposits and purchasing power, saying the
effects would be dissimilar.
Lopping off zeros will not have any potential effect on the inflation rate.
However, as adjusting to the new currency involves some prices to be in
round numbers there are fears that some businesses could abuse this
Bank deposits of people and their purchasing power would not be negatively
influenced by the redenomination either.
Regarding the non-influence on less zeros on the purchasing power, the
report said buying power, as a rule, is largely impacted by liquidity levels
and its volume compared to economic growth.
The CBI in January unveiled a new 500,000-rial Iran Check with four faded
zeros. The fact that four zeros on the money are pale was construed by
economic experts and analysts as the first step toward lopping off zeroes.
In designing the new checks, four zeros on the top-right of the check are
printed in faded color than the color of the first two figures. Also, the
figure ‘50’ is conspicuous on the bottom-right.