The Governor of the Bank of Russia Elvira Nabiullina is due to arrive in Tehran today.
"Tehran is hosting the chief of the Central Bank of Russia and talks will focus on following up agreements and documents signed by the two sides last year," Mohsen Karimi, the Central Bank of Iran deputy for international affairs was quoted as saying by IBENA. He did not provide details.
Russia’s top banker will also take part in the 51st Asian Clearing Union (ACU) Summit, which opens today (Tuesday) in Tehran. Russia is participating as an observer in the meeting.
Cooperation between the two countries gained momentum last year amid western sanctions on Moscow and Tehran. In 2022 both sides reached agreements to expand cooperation, from barter supply deals for Iranian turbines, spare parts and aircraft equipment, to contracts for the joint construction of gas pipelines.
The CBI and Russia signed a deal in January to connect their national interbank communication and transfer systems to help boost trade and ease two-way bank transactions.
Per the deal, 52 branches of Iranian banks and four unnamed foreign banks were to use Iran's local interbank telecom system, known as SEPAM, to connect with 106 banks using Russia's System for Transfer of Financial Messages or SPFS.
Iran's Bank Shahr and Russia's VTB Bank were involved in the pilot program and other lenders are to join gradually. The agreement was signed in Tehran by Karimi, and Vladislav Gridchin, on behalf of Russia’s central bank.
Back then Karimi said the deal was a big step forward in implementing counter-measures against banking sanctions between Iran and Russia. "The two local interbank systems cannot be sanctioned and their infrastructure is not controlled by western governments," he was quoted as saying.
"The contract is the first step outlined in the join action plan of banking cooperation signed last year by the two central banks. This should pave the way for all Iranian banks to interact with Russian lenders.”
Gridchin expressed Russia’s interest in enhancing ties with Iranian banks noting that the agreement will help promote bilateral trade and a defining feature is that it cannot be sanctioned.
SPFS is the Russian equivalent of the SWIFT financial transfer system developed by Russia’s central bank. It is in place since 2014 when the United States government first threatened to disconnect Russia from the SWIFT system.
SEPAM (a Persian acronym) currently functions as a venue through which interbank transactions are conducted electronically. It is said to be capable of being connected to foreign banks.
ACU Summit
The 51st conference is being held at the level of governors of central banks, their deputies plus representatives of the central banks of Russia, Belarus, Afghanistan and the Islamic Development Bank, Karimi said.
The ACU was established in December 1974 at the initiative of the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP). Its member countries include Bangladesh, Bhutan, India, Maldives, Myanmar, Nepal, Pakistan, Sri Lanka and Iran.
The organization originally sought to secure regional cooperation as regards the settlement of monetary transactions among the members of the union and to provide a system for clearing payments among the member countries on a multilateral basis.
"The summit is to make significant decisions regarding de-dollarization and reducing reliance on the dollar in transactions among members,” he said. “Discussions will be held regarding the interbank messaging system to achieve independence from SWIFT."
The Central Bank official also noted that the Asian Clearing Union has identified good potential for de-dollarization.
The CBI has been working on various measures to reduce the country’s reliance on the US dollar in international trade. “The central bank seeks to curb reliance on the dollar and enter into monetary transactions and currency swap deals with other countries,” Karimi said.
Iran and Russia have already started trading in national currencies. The share of such settlements exceeded 60% in 2021, according to Russian officials.
New Members
According to the official, some countries have requested to join the Union.
During the event, participants will also discuss amendments to the Union’s charter aimed at facilitating the admission of new members other countries and to use the currencies of member countries as settlement currencies.
"Efforts have been made to accept other countries into the Asian Clearing Union to expand and strengthen this Union,” he said, "In the past year in specialized committees worked on Union's Charter to improve its compliance with current international monetary and banking developments.”
