Iran’s parliament on Monday passed a bill allowing the government to cut four zeros from its national currency, Reuters reported on Monday, citing state media sources.
The bill - entitled 'Reforming Monetary and Banking Law' - follows an initiative to change the currency from the rial to the commonly used toman, first formally proposed by the government in August, according the Mehrnews.
"The bill to remove four zeroes from the national currency was approved by lawmakers," Iran’s Students News Agency ISNA said.
Under the new law, 10,000 rials will be equal to one toman and each toman will be equal to 100 parseh, the minor unit of the new currency.
The idea of the transition was first conceived in 2008 but gained traction after 2018 following US President Donald Trump's formal withdrawal from a landmark 2015 nuclear deal and the reintroduction of sanctions as part of a campaign of "maximum pressures" on Iran's economy.
At the time, the rial took a nosedive and lost more than 60 percent of its value. The Iranian government took drastic measures by arresting unlicensed traders and speculators – even executing some.
The crippling US sanctions resulted in the heavy devaluation of Iran's currency, which currently trades at nearly 156,000 rials to the dollar on the unofficial market, according to foreign exchange websites.
Following parliamentary approval, the bill will be reviewed by the Guardian Council – the clerical body which vets legislation before it takes effect.
The Central Bank of Iran will then have two years to "pave the ground to change the currency to Toman", Retuers report.
The transition will not be cheap. A state media report last year estimated the cost of implementing the overhaul at around $160 million, based on the cost of destroying and replacing some 8.8 billion banknotes in circulation, including legal tenders issued by banks.
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