The Central Bank of Iran is pursuing two plans to facilitate commerce with the world when the international sanctions are lifted.
Speaking at the Iran Transaction Exhibition in Tehran on Monday, the CBI governor, Valiollah Seif said, “Reconnecting to international banking transactions system SWIFT is the first step, although certain banks have maintained their links to the system despite the sanctions against the banking sector.” The development is expected to help commercial activities back on track after several years of disconnect with the global provider of secure messaging services.
A special committee comprising representatives from the supervision, payment systems and foreign exchange affairs has been set up within the CBI to make the preparations for reconnecting to SWIFT and monitor the information exchange, Seif told the expo.
The regulator is also trying to connect the national payment network with the big and small international networks including, but not limited to, bank card payment with the neighboring countries. “The roadmap to realize this objective has been developed”, he added.
>> Successful Transactions
Elaborating on the status of electronic payment in the country, he said “Last year, over 20 billion inter-bank electronic transactions were conducted to offer 11 billion banking services. Of the total, 99% of the transactions were recorded as successful.”
Including the intra-bank services, the number of total electronic transactions in the last Iranian year that ended March 20 can be estimated at 30 billion.
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>> The Way Forward
The governor noted that advanced electronic payment systems brings “integration, flexibility and development” and said, “Despite significant increase in liquidity and deposits, the number of bank branches and employees has remained unchanged and in some cases lessened.
Launching the CBI's core banking system last year to provide electronic services to the government, municipalities, public agencies and businesses, which could also be connected to the interbank information transfer network, SHETAB, was noted by Seif as a major step toward "institutionalizing electronic banking."
In addition, successful implementation of the Food Basket Program in 2013 via the national electronic payment system was another important measure.
On future steps by the top bank, the governor said “The regulator has planned to integrate, develop and renovate the comprehensive information system by employing modern technology."
He proposed setting up an information-sharing system for the banking sector to foster two-way communication channels between the regulator and banks on the one hand, and the banks and the public on the other.
Countdown for Sanctions Relief
The countdown has been launched for lifting the sanctions imposed on the banking industry and Central Bank of Iran, Head of the Planning and Management Organization, Mohammad Baqer Nowbakht said Monday.
Addressing the Iran Transaction Exhibition, he acknowledged that the banking sector was unable deliver and live up to the expectations of businesses during the decade plus sanctions period.
However given the scale and scope of obstructions created by the unilateral sanctions, he had a word of praise for the banks and said despite the challenges the country withstood the sanctions and the banks' overall performance was "particularly commendable" especially in the past two years. He was referring to the period after President Hassan Rouhani took office in the summer of 2013.
Post-Sanctions
The government spokesman emphasized the key role of the banking industry in the post-sanctions era saying its contribution would be indispensable in helping materialize the expected annual 8% economic growth envisaged for the next five-year economic development plan (2016-21).
"To achieve 8% growth we need something between eight uadrillion rials ($267 billion) to 10 quadrillion rials ($ 355 billion) a year. Banks can help the government achieve this target by playing an active role in key sectors, namely hi-tech and financing."
CBI Performance
Praising the CBI for its anti-inflationary policies, President Rouhani's close aide and confidante said controlling a hyperinflation of 40% and reducing it to 13% is a feat achieved with CBI assistance during the crippling sanctions era.
The senior official also pointed to the key role of the banks, in particular the CBI, in navigating the period between the 'Adoption Day' of the JCPOA and the complete lifting of the sanctions.
Iran's nuclear agreement with the six world powers -- also known as the Joint Comprehensive Plan of Action – calls for the removal of the international sanctions in exchange for curbs on the country's nuclear program.
"During these months (before the sanctions are official scrapped) the CBI can play a key role by helping accelerate the economy's exit from recession and stimulate growth (efficient) monetary and fiscal policies."
