Iran, Russia sign deal to form joint banking oversight body

Iran and Russia have signed a basic agreement to create a joint regulation body to oversee interbank financial transactions between the two countries. 

The agreement - that has been signed between the Iranian and Russian central banks - has now taken both countries one step closer toward the establishment of a promised joint bank which is believed to have been specifically designed to help dodge the effects of US-led sanctions on the two countries.     

Iran’s Fars news agency has reported that deputy governors of central banks of Iran and Russia signed the agreement during the visit to Moscow by a ranking delegation from the Central Bank of Iran (CBI).

Iran’s Ambassador to Russian Mehdi Sanaei said in late January that Tehran and Moscow are working on a plan to switch their bilateral trade to national currencies for which he said the two countries will create a joint bank or a mutual account. 

“Both sides plan to create a joint bank, or joint account, so that payments may be made in rubles and rials and there is an agreement to create a working group [for this],” Ambassador Sanaei told the Russian news agency Sputnik.

Also, Assadollah Asgaroladi, a veteran Iranian merchant and the chairman of Iran-Russia Joint Chamber of Commerce, said the bank could break the domination of Western currencies over bilateral exchanges and that it would eventually open a new chapter in trade relations between Tehran and Moscow. 

“Since Russian banks fear the implications of working with Iran due to sanctions, we want to establish the joint Iran-Russia bank with the help of our central banks and private sectors,” Asgaroladi said.

“Such a bank would be able to exchange money between the two sides using rials and rubles and put aside dollars, euros and pounds,” he added.

Although no specific date has been set for the establishment of the joint Iran-Russia bank, the report by Fars news agency suggests that it could come on stream within the next few months.  The report has also quoted an unnamed official from the Russian central bank as saying that a delegation will arrive in Tehran from Moscow in May to discuss the outstanding issues over the establishment of the two countries’ joint bank.    

The report has also emphasized that the bank once operational will help elevate economic ties between Iran and Russia to “significantly high records”.     

Iran and Russia both face a series of strict sanctions engineered by the United States and its allies. The sanctions on Iran are due to disputes over the country’s nuclear energy program and the country is discussing their removal in nuclear talks with P5+1 group of countries – the permanent members of the Security Council plus Germany. The sanctions on Russia are due to the country’s alleged involvement in the Ukraine crisis. Both Iran and Russia have described the sanctions as illegal and have been calling for their immediate removal.

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