South Korea is planning to launch a euro-based payment system, designed for companies that wish to do business with Iran. The Seoul government is now in the process of selecting a bank to manage the new system. The two candidates are the Industrial Bank of Korea and Woori Bank.
In early May, Woori Bank inaugurated its representative office in Tehran, which marked the first presence of a South Korean lender in Iran since 1962 when the two countries initiated diplomatic ties. A few days later, Bank Pasargad Iran and Woori Bank agreed to expand correspondent relations to help improve commercial relations between the two countries. BPI and Woori also agreed to start offering advisory and networking services to Iranian and South Korean companies.
According to Koreaherald.com, partner banks in Europe will also be selected following further talks with Washington. This news comes after the US government gave its nod of approval to the move in June during a Korea-US finance ministers meeting.
Trade with Iran has been widening, especially following President Park Geun-hye’s visit to the Islamic Republic in May. Euro is the currency preferred by the Iranian government and companies, but the South Korean currency won must first be converted into dollars, meaning the new payment system requires the cooperation from Washington.
South Korean firms have been requesting Seoul to open a euro-based payment system for a while, but the government has been unable to strike a deal due to limitations posed by US local laws. South Korean firms are currently obliged to make all monetary transactions via their Korean currency accounts at the Central Bank of Iran.
Eager for Business
The Korean ambassador in Tehran has expressed dissatisfaction with the fact that despite the passage of a considerable time since the JCPOA came into effect, banking relations between major international banks and Iran still face major hurdles.
Kim Seung-ho, present at Finex 2016, said even though it has been six months since the implementation of the JCPOA (Joint Comprehensive Plan of Action) between Iran the six world powers, major international banks have yet to start their dealings with Iranian banks. “We had to bring in our own budget at the embassy through informal channels”, he complained, Tasnim News Agency reported.
Noting that his country is eager to expand economic and trade relations with Iran, the senior diplomat warned that “financial issues, foreign investment and the problem of major international banks’ dealings with Iran still persist and if these issues are resolved Iran will reach its true potential in the global market.”
Kim emphasized that the world powers who signed the nuclear deal with Iran need to encourage their banks to commence dealings with Iranian banks. “Western officials promised to fulfil this, but it is actually a decision for the private firms,” he concurred. “The (western) officials say they can’t pressure private companies,” which is not justified, because they have committed to persuading private entities to do business with and invest in Iran, he was quoted as saying.
The ambassador pointed to the 80-million-strong Iranian market, which coupled with the country’s strategic location and abundant natural resources, can help move the economy toward a “tremendous shift” if put to effective use.
“You should not be content with inviting foreign investors. You yourselves should provide capital and a suitable atmosphere for foreign investors” to return, he said addressing himself to the Iranians.
