Why in news?
• The Iranian Parliament authorised the replacement of the national currency, the rial with another basic unit of currency called the toman.
About:
• The plan is set to effectively cut four zeros from its currency, making each toman worth 10,000 rials under the new system.
• The Guardian Council, a body of conservative clerics that supervises Parliament, is expected to ratify the law, and then the Central Bank will have two years to implement the change — removing rials from circulation and issuing tomans instead.
• Iran’s move is to offset the fallout from inflation fueled by U.S. sanctions.
BACKGROUND
The Iranian toman is a superunit of the official currency of Iran, the rial. One toman is equivalent to ten rials. Although the rial is the official currency, Iranians use the toman in everyday life.
Originally, the toman consisted of 10,000 dinars. Between 1798 and 1825, the toman was also subdivided into eight rials, each of 1,250 dinars. In 1825, the qiran was introduced, worth 1,000 dinars or one-tenth of a toman.
In 1932, the rial replaced the qiran at par, with 1 toman being equal to 10 rial. On 7 December 2016, the Iranian government approved a call by the Iranian central bank to replace the Iranian rial with the more colloquially and historically known toman denomination.
In early 2019, following the hyperinflation of the rial, the central bank made a new proposal, suggesting the currency be redenominated by introducing a new toman with a value of 10,000 rials.
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