EghtesadOnline: Seven central banks have agreed to establish a special payments channel to facilitate payments for Iran and turn this channel into an institution in the future, Foreign Minister Mohammad Javad Zarif said, answering a question about the details of the payment mechanism announced by the EU.
He said the European countries’ efforts in recent months to find ways to maintain trade with Iran following the reinstatement of unilateral US sanctions.
He said the primary function of the payment system will relate to Iran’s commercial dealings in the near future. However, there are plans for the payment channel to be turned into an institution that will expand its activities beyond Iran, IRIB reported on Friday.
Federica Mogherini, the European Union foreign policy chief, said in an interview that the channel called Special Purpose Vehicle (SPV) is not limited to Europe and other countries and firms that have business dealings with Iran will also be able to transfer money, Financial Tribune reported.
In an effort to mitigate the effect of sanctions, the EU, Russia and China announced this week that they would establish a new payments system to enable foreign businesses to continue trading with Iran.
Federica Mogherini, the bloc's foreign policy chief said the EU will create new payment channels to preserve oil and other business deals with Iran in a bid to evade US punitive measures.
European Union’s announcement late Monday that it would establish a special payments channel to maintain economic ties with Iran sent a clear message to Tehran and Washington according to many: Europe is intent on trying to save the 2015 nuclear deal.
“Transactions will be done only in euro and the US dollar will not have any place. I think it’s a good solution to sidestep US sanctions in banking,” he added.
Iran is under pressure to find new ways to maintain connections to the global financial system as US sanctions bite and the Trump administration prepares to impose measures intended to stop Iranian oil exports in November.
The Iranian banking system is struggling with acute problems such as non-performing loans. Domestic banking regulations are not in line with strict international standards on risk management, capital requirement and auditing.