Iran began implementing a long-delayed plan to drop four zeros from its battered currency after President Masoud Pezeshkian instructed the Central Bank on Saturday to begin two years of preparations.
Under the order, the Central Bank of Iran must prepare the shift within two years before managing a three-year phase in which old and new banknotes circulate together.
Once that cycle ends, all transactions will be settled in the new unit and existing notes will be withdrawn, according to Iranian state media.
Parliament earlier approved a law defining the “new rial” as equal to 10,000 current rials, with “gheran” designated as the subunit.
Economists remain divided over the effect of the redenomination. The policy is expected to require printing new notes, destroying old ones and modifying banking and accounting systems.
Critics argue that without wider reforms the move is mainly cosmetic, citing Argentina, Zimbabwe, Romania and the former Yugoslavia, where redenominations did little to restrain prices.
“This policy is largely cosmetic,” economist Ahmad Alavi told Iran International in August. “Without tackling the roots of inflation – from liquidity growth to systemic inefficiencies – removing zeros will not restore the rial’s value.”
Debate over deleting zeros began in the late 1990s and circulated through multiple administrations. Parliament first passed the plan in 2020, but the Guardian Council sent it back for revisions. The current version – retaining the name “rial” and introducing “gheran” – won final approval in October and has now entered execution with Pezeshkian’s signature.
Long path to implementation
Officials say the overhaul aims to simplify calculations, improve the legibility of Iran’s currency and prepare the ground for broader fiscal measures.
The abundance of zeros in the national currency had caused accounting and operational difficulties, Shamseddin Hosseini, head of parliament’s Economic Committee, said last month, adding that similar redenominations had been undertaken by countries such as Turkey in 2003 and 2005.
The reform comes amid persistent inflation of about 40%, a more than 90% loss in the rial’s value since US sanctions were reimposed in 2018, and widespread economic hardship.
With the formal order issued, the central bank begins one of the Islamic Republic’s most extensive monetary reforms, whose outcome still hinges on the government’s broader effort to control inflation.
