CBI Governor Hails Nuclear Deal as Beneficial

A year has passed since Iran's nuclear accord with world powers has been implemented and the governor of Central Bank of Iran believes the deal has paved the way for financial institutions outside of the United States to resume work with the country.

"Reaching the goals is relative in any agreement and it can never be said that 100% of the targets have been realized, but that does not mean that the nuclear accord [apart from the way it was implemented] will not get a passing score," Valiollah Seif also said in an interview with the government-owned newspaper Iran about the deal's achievements, reports Dolat.ir.

"We believe that the accord created a capacity so that non-American banks and credit institutions could cooperate with Iranian banks and credit institutions without fearing sanctions from the US, the European Union and the United Nations," he added.

On July 14, 2015, the P5+1 (China, France, Russia, the United Kingdom and the United States, plus Germany), the EU and Iran reached a Joint Comprehensive Plan of Action.

January 16, 2016, marks Implementation Day of the JCPOA.

Seif noted that the reality is that international banks do not take a different approach overnight and establishing correspondent relations in their fullest form requires hard work, negotiations with the banks and creating prerequisites that take time.

He explained that during the years when Iran was disconnected from the international financial system, big changes were made in banking regulations across the world.

"In order to be active on the international scene on par with other banks, Iranian banks must understand these changes and upgrade their financial and professional standards to the level of international standards," he said.

"This is irrelevant to the JCPOA and since professional banking standards are defined for banks all over the world and are not limited to Iran, Iranian banks should not expect an exemption."

The central bank governor also said matters such as capital adequacy ratios, loan regulations and other major commitments are general standards that are supported by logic and expert reasons.

"Therefore, any existing problems need to be dealt with in order for the country to have an active presence on the international scene," he said, adding that preventing the remaining sanctions from influencing matters outside the accord is also very important "and we will insist on them".

In a speech at the US Council on Foreign Relations last year, Seif complained that “almost nothing” has been done to reintegrate Iran into the global economy since it implemented the nuclear deal in January.

“Unless serious efforts are made by our partners, in my view, they have not honored their obligations,” he said at the time.

Primary Sanctions

Asked about Iran's access to dollar transactions and the fact that it was not part of the negotiations, the official said being able to engage in such transactions will have positive aspects, but it will also give rise to negative issues.

"Firstly, I must explain that having access to US dollar transactions is different from accessing the US financial system," Seif said. "The provision of services of US banks and financial Institutions to Iran is currently prohibited."

In other words, he added, if non-American banks wish to offer services to their Iranian counterparts using the greenback, they are allowed to do so as long as it does not directly involve the US financial system.

The CBI governor then pointed out that American banks have had no ties with Iranian banks since the very beginning of the Islamic Revolution in 1979.

"Their primary sanctions were devised and implemented before Iran's nuclear program and therefore alleviating these sanctions was not part of the negotiations," he said.

Seif, who is also the head of Money and Credit Council, explained that before JCPOA, Iran's correspondent relations were limited to a handful of countries.

He noted that if the sanctions were to remain in place, oil export conduits would be reduced and "we would have no choice but to reestablish the rationing system in use during the first years of the revolution".

"Except a single country that had ordered its banks to provide Iran with banking services, a number of countries had each singled out one bank that monopolized services with Iran," he said.

"They would change the regulations any way they wished and imposed high costs on Iranian importers. That is while we had no leverage in negotiations and sometimes they would even abruptly halt their services or set an expiration date."