Governor of the Central Bank of Iran Valiollah Seif said initiatives are underway to prepare Iran's banking system for adopting Basel II and III standards.
In his speech to the annual South East Asia, New Zealand and Australia (SEANZA) regional group meeting in Nepal, Seif said the Iranian banking system has already adopted the risk-based Basel I capital adequacy accord and is making the move to adopt more advanced and up-to-date banking rules.
"Iran intends to design a framework for comprehensive financial sector reforms, including changing laws and regulations of the banking sector and the central bank," Seif was quoted as saying by CBI's website on Saturday.
"We have taken on broad stress testing and asset reclassification. Provisioning requirement scenarios have been tightened to bring these in line with best practice standards."
Seif noted that transparency and disclosure requirements in the banking system have been made more demanding by requiring banks and credit institutions to prepare their financial statements, according to International Financial Reporting Standards.
Iran on Friday was selected as the rotating president of SEANZA with the CBI slated to host the 31st Governors’ Symposium in Tehran in 2017.
The establishment of SEANZA grew out of a 1956 meeting of central bank governors from the Asia-Oceanic region. One of the oldest and largest regional central bank groups, membership in it grew from the original five to 20. SEANZA was formed to promote cooperation among central banks by providing intensive and systematic training courses for central bank staffs. Training courses are held biennially with a rotating system of host members. It also provides an avenue for information exchange on issues and problems of common interest among member economies.
Quick changes of global and regional markets, especially after the financial crisis, highlight the necessity, relevance and value of this forum. Enhanced regional and global cooperation is necessary to counter banking and financial crises in the face of the interconnected financial markets. It is also imperative to increase interactions and cooperation to ensure smooth handling of the regulations and supervision of the financial markets and institutions, and prevent regulatory arbitrage in this fast and open global economy.
Seif noted in his speech that CBI had restructured the supervision section and added some new departments with clear tasks and responsibilities.
CBI has also placed emphasis on further strengthening supervision of individual institutions through periodic and occasional inspections.
Policy Record
Seif took note of the recent developments in Iran's economy and said over the past three years, the economy has managed to achieve many important goals.
"Inflation rate has been lowered to around 9% from above 40% in mid-2013. Foreign exchange market has been very calm and stable," he said.
"Oil-exporting countries faced a significant drop of oil prices in early 2013. However, Iran managed to safeguard its national currency and preserve its foreign exchange reserves."
Seif added that by successfully curbing inflation expectations, CBI managed to complete the process of painless disinflation toward a single-digit rate while securing a positive economic growth rate.
The CBI chief anticipated a GDP growth of 5% for the current Iranian year (March 2016-17), saying exchange rate unification is another priority for this year.
"A calm and stable foreign exchange market, together with better international banking correspondence after JCPOA, has provided favorable conditions for the successful implementation of exchange rate unification," he said.
"After the implementation of the Joint Comprehensive Plan of Action between Iran and P5+1 in January 2016 and termination of all nuclear related sanctions, Iran is fully open for business, including in banking, finance and foreign investment."
