The Governor of the Central Bank of Iran Ali Salehabadi said the central banks of Iran and Russia have agreed to expand banking and monetary relations.
Heading a delegation, Salehabadi was received by deputy prime minister, Alexander Novak, on Friday in Moscow.
“We discussed expanding monetary and banking cooperation and promoting joint investment plus ways to remove hurdles,” Salehabadi was quoted as saying by the CBI website. He did not elaborate on the hurdles.
The agreements are in line with earlier understanding between the presidents of both countries to work for sustainable economic collaboration, he said.
“Fortunately, there is a political will on both sides to expand economic relations,” he said, adding that the agreements will soon come into effect and businesses in the countries will see the results.
Novak described expanding economic and investment cooperation between the two countries as “a necessity and a priority”, announcing Moscow’s will to build closer ties.
In his two-day visit Salehabadi held talks with Maxim Reshetnikove, the minister of economic development and Elvira Nabiullina, head of Russia’s central bank.
The target of tough US-led western sanctions, Iran and Russia now seem more committed to enhance economic and financial relations.
Tensions between Washington and Tehran increased after May 2018 when former US president Donald Trump abandoned the landmark Iran nuclear agreement, known as the Joint Comprehensive Plan of Action (JCPOA), and imposed an economic blockade.
The American policy has targeted a broad range of businesses in Iran, from the key oil industry to the auto sector, trade in gold and precious metals, shipping, and more importantly banking relations with the outside world.
Despite the restrictions Tehran has maintained trade with neighbors and others to the best of its ability.
Tough sanctions against Russia were announced soon after the country invaded Ukraine prompting Moscow to ramp up its de-dollarization efforts.
Russia and some other countries, including Iran, have introduced de-dollarization measures as the US, as a matter of policy, uses its currency as a tool to impose sanctions.
Alternative Banking Messaging Systems
Among the agreements, Salehabadi pointed to efforts to eliminate the dollar and euro in two-way financial transactions.
“Using non-dollar and non-euro currencies are among the issues that are seriously pursued. We hope to see the results in practice.”
On the de-dollarization efforts, Salehabadi pointed to using local banking messaging services instead of SWIFT (Society for Worldwide Interbank Financial Telecommunication).
Russia has a nationwide payment network as Iran, and given the geopolitical implication of closer bilateral ties, expanding banking ties is seen as crucial.
“Iran is currently using local interbank messaging system instead of SWIFT and Russia has its own local messaging systems. These can form a basis for expanding our banking cooperation.” the CBI boss was quoted as saying.
SEPAM (a Persian acronym) is the Iranian local messaging system, which currently functions as a vehicle to conduct inter-bank transactions electronically. It is said to be capable of being connected to foreign banks.
In November 2018 and in the follow-up to enforcing new round of US sanctions against Tehran, the Belgium-based SWIFT cut off ties with individual Iran-based banks for the sake of the "global stability of the system."
SWIFT declared in October 2014 that it was under pressure from several states that were adding to the sanctions against Russia but said it does not plan to surrender.
Following the threat of sanctions from SWIFT in 2014, the Bank of Russia created its own transaction system in the same year as an alternative to SWIFT to ensure intermittent financial services.
