The bank would have two years to create the "toman" currency, returning to a name that has not been officially used since the 1930s.
Iran's president sent a bill to parliament on Wednesday that would cut four zeroes from the value of the country's sanctions-battered currency, the rial, as tensions remain high between Tehran and Washington.
By sending the bill to lawmakers, President Hassan Rouhani's government shows it is serious about an idea considered for some time in Iran, where people discuss monetary transactions in both rials and informally, but more commonly in tomans. A toman is worth 10 rials.
If passed by parliament and approved by lawmakers, Iran's Central Bank would in effect devalue the rial and rename it as toman.
The bank would have two years to create the new toman currency, returning a currency name that has not been officially used since the 1930s.
Authorities have given no estimate for the cost of creating the new currency.
Iran's rial has been battered by increasing US sanctions on the country since President Donald Trump's decision to pull out of Tehran's nuclear deal with world powers over a year ago.
On Wednesday, the rial traded 116,500 to $1.
At the time of the 2015 nuclear deal, the rial traded 32,000 to the dollar.