Central bank chiefs of Iran and Russia met Tuesday in Tehran and exchanged views on building banking and financial cooperation and expanding the use of national currencies in bilateral and possibly multilateral trade.
According to the Central Bank of Iran website, Mohammad Reza Farzin stressed the need and significance off prompting effective banking and monetary ties. "Establishment of correspondent relations between the banks of the two countries is on the CBI agenda," Farzin told the visiting Russian banker.
He noted the potential for two-way trade and called for creating the proper conditions for increasing cooperation between the two sides.
Head of the Central Bank of Russia, Elvira Nabiullina also emphasized the need to closer financial and banking interaction and “optimizing the banking infrastructure of the two countries to enhance trade and economic cooperation”.
She highlighted the key role of technical and specialized exchanges between the two central banks to enhance monetary and banking relations.
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 two central banks signed a deal in January to connect their national interbank communication and transfer systems to help lift 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.'
Commercial banks are reportedly planning to open offices and branches in Russia. Russia VTB bank also launched an office in Tehran last week.
Pakistan Ties
Farzin also met with Jameel Ahmad, the governor of the State Bank (central bank) of Pakistan, on Wednesday and expressed hope to expand bilateral banking relations. He underscored the relevance of the current two-way cooperation in the framework of the Asian Clearing Union (ACU).
Farzin called for the establishment of a banking channel with the neighboring nation. Pakistani banks in the past were positive about creating such a channel.
Regarding the significance of creating and utilizing alternative financial messaging systems in interbank relations, Farzin said, "Iran's robust financial messaging systems can serve as an alternative to SWIFT and greatly facilitate financial and banking communication between our two countries."
He further underlined the importance of card-based banking transactions for Iranian traders in Pakistan and vice versa. "Iran is prepared to help build infrastructure that connects the bank cards of both sides.”
One of the proposals by Farzin was the formation of a working group, led by deputy governors of the two central banks, to enhance meaningful bilateral cooperation. "A joint banking committee, given the proximity and cultural and religious similarities between Iran and Pakistan, is necessary and should get priority.”
Ahmad expressed his government’s interest in boosting banking ties with Iran and welcomed Farzin's proposals for using alternative messaging systems and connecting the bank card networks. He said that the SBP is willing and able to form the joint committee to pave the way for cementing banking ties with Iran.
