Iran's Economic Adaptation Under Sanctions: A Shift towards Alternative Currencies

The international economic landscape is witnessing a significant shift as countries seek to reduce their dependence on the US dollar. Iran, facing sanctions imposed by the United States, has successfully developed a complex system of workarounds to bypass these restrictions. This multi-layered approach involves banks, intermediaries, 'shadow' networks, and cryptocurrencies, allowing the country to maintain its economic activities despite the isolation.

At the heart of this system is China's absorption of more than 80% of Iran's seaborne oil exports. Transactions are increasingly conducted in yuan, aiming to reduce dependence on the dollar. Funds remain in controlled accounts and are mainly used for payments to Chinese companies or for imports. The CIPS (China International Payment System) platform, created by the People's Bank of China in 2015, facilitates these transactions.

However, it is not just China that is involved in this new economic landscape. Alternative payment infrastructures such as Project mBridge, a cross-border payment platform using CBDCs, are being explored. While there is no public evidence of direct use by Iran, the possibility of indirect involvement through banks and intermediaries remains.