Iran and Russia have joined forces to enhance their trade and financial transactions through connecting their inter-bank communication and transfer systems.
This move was announced by Mohsen Karimi, Deputy Governor of Iran’s Central Bank, as both nations are facing Western sanctions. The 2018 re-imposition of US sanctions on Iran has resulted in the nation being disconnected from the SWIFT financial messaging service. Meanwhile, similar restrictions have been imposed on some Russian banks due to Moscow’s invasion of Ukraine.
According to Karimi, Iranian banks no longer require the use of SWIFT with Russian banks, which would allow for the opening of Letters of Credit and transfers or warranties. He added that around 700 Russian banks and 106 non-Russian banks from 13 countries would be connected to the new system, without revealing the names of the foreign banks. Iran’s Central Bank chief, Mohammad Farzin, welcomed the move and stated that the financial channel between Iran and the world is being restored.
With both nations grappling with economic difficulties, Iran and Russia have been building close bilateral ties, seeking to establish new economic and diplomatic partnerships. Iran is facing rising inflation and unemployment, with over 50% of Iranians below the poverty line. Meanwhile, the country’s top authority, Supreme Leader Ali Khamenei, stated that the establishment is facing “a tangible welfare and livelihood problem” that cannot be cured without economic growth.
In conclusion, Iran and Russia’s collaboration on their inter-bank communication and transfer systems aims to boost trade and financial transactions, as both nations face the challenges of Western sanctions and economic difficulties.
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