A loaf of bread in Tehran costs 100,000 rials. Or — should it be 10 tomans now? Or 10,000 tomans (roughly $1.00)?

For ordinary Iranians, a single toman simply means 10 rials. But with the government attempting to streamline currency, even the basic act of buying groceries could soon become a confusing tangle of numbers.

The efforts to introduce toman as currency were proposed in 2016 and launched in 2021.

The plan was to remove four zeroes compared to the rial prices, and official rial banknotes have been redesigned to have the last four digits in much paler color to help people adjust to the change.

Although the plan looked good on paper, the economic reality for most people has not changed.

And then currency reform stalled under the administration of late President Ebrahim Raisi.

His successor Masoud Pezeshkian revived the initiative last month. Iran's Parliament is due to vote on a bill to renew the process in a bid to curb persistent inflation and economic instability, although the date for the vote has yet to be set.

Structural reform vs. placebo effect

Initially, removing zeros from the currency was aimed to simplify transactions and improve confidence in Iran's financial system.

Proponents argued it would also reduce the psychological impact of inflation. But inflation has not abated, and the public's confidence has continued to erode since 2021.

Arezoo Karimi, an economic journalist based in London, said the measure is "relatively ineffective."

"Removing zeros from the national currency has no effect on the fundamental issues of the economy, such as inflation, the intrinsic value of money, liquidity, GDP, and unemployment," she told DW. "Nor will it in the future."

What was expensive in rials will still be expensive in tomans

Since the reimposition of US sanctions in 2018, the rial's value has plummeted by more than 80% against the dollar.

This devaluation has fueled hyperinflation, with the cost of essential goods like food and medicine doubling in the past year alone. Many Iranians are struggling to meet basic needs as wages fail to keep pace with rising prices.

"Last month, I spent half my salary just on groceries,” said Farshid, a Tehran shopkeeper. "It doesn't matter whether it's the rial or the toman — everything is too expensive."

Who got currency reform right?

Currency reforms to combat inflation are not new, and many countries have undertaken similar initiatives to stabilize their economies in the past. But these reforms often yield mixed results, with success heavily reliant on broader fiscal measures and structural changes.

Germany in the 1920s was in the midst of one of the most severe hyperinflation crises in history.

Then, the Weimar Republic introduced the Rentenmark to replace the old mark, removing 12 zeros from the currency.

The measure restored some public confidence, but the new mark's long-term success is largely attributed to the fiscal discipline that followed, including international loans and stabilization measures supported by the League of Nations.

Much more recently, in Turkey, officials removed six zeros from the lira in 2005, following it up with stringent fiscal policies, such as reducing budget deficits and controlling inflation. Once again, its currency reform relied on other factors to stabilize the economy.

In the 1990s, Brazil introduced a new currency, the real, also combining it with strict fiscal policies aimed at controlling inflation.

The reform included measures like reducing public sector deficits, tightening the money supply, and implementing price stabilization plans. Brazil's success is often cited as a model for managing inflation that addressed both inflation and economic growth.

Who got currency reform wrong?

But history also shows that currency reforms can end badly. For example, the government removed multiple zeros from the currency in Zimbabwe in the early 2000s, but did not address underlying issues such as political instability and corruption. Similar redomination efforts also failed to bear fruit in Venezuela.

Also, Argentina has experienced multiple currency crises throughout its history, with the government responding with measures to address inflation and stabilize the economy.

While Argentina has occasionally removed zeros from its peso, these efforts have been unsuccessful in stopping inflation in the long run. The South American country still suffers from structural issues such as chronic deficit, heavy reliance on the US dollar, and political instability.

Iran's system 'outdated'

"Iran's reliance on oil revenues and persistent sanctions mirrors challenges faced by Venezuela," Kamran Nadri, a Tehran-based economist, told DW.

"Without systemic reforms, currency changes alone won't work."

Both Venezuela and Iran are under embargos enforced by the US. This means have restricted access to global markets, deterred foreign investment, and hampered modernization efforts in critical sectors like banking and oil. Although Iran has sought closer economic ties with China and Russia, these relationships have not compensated for the impact of sanctions.

"Our financial system is outdated," Nadri said. "Sanctions make it nearly impossible to attract foreign capital, which is essential for growth."

Young Iranians keep leaving

Meanwhile, frustration among Iranians is mounting. A recent survey found that 75% of respondents believe the currency reform has failed to improve their economic situation. Many young, educated people are leaving the country, exacerbating a brain drain that threatens Iran's long-term development.

"I'm saving every toman I can to move abroad," one university graduate told DW. "There's no future here."

Experts agree that Iran would need more than cosmetic fixes to move forward, including diversifying the economy, tackling corruption, and improving transparency. Additionally, easing sanctions through diplomatic negotiations, such as reviving the 2015 nuclear deal, could help stabilize the economy.

"Without a coordinated strategy that addresses both internal and external challenges, we'll be back here in a few years," warned economist Nadri.

Edited by: Darko Janjevic