Iran and Russia have signed an agreement to create a joint regulation body that will oversee interbank financial transactions between the two nations, Iran’s Fars News Agency (FNA) reported on Saturday.
According to FNA, a memorandum of understanding (MOU) was signed by the deputy governors of the Central Banks of Iran and Russia on the supervision of the Central Banks over the financial operations of its banks, a move that takes both countries one step closer towards the establishment of a promised joint bank, which will help dodge the effects of U.S.-led sanctions.
In late January, Iran’s Ambassador to Russia, Mehdi Sanaei, said that Tehran and Moscow were working on a plan to switch bilateral trade to their national currencies by creating 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 said.
The bank could break the domination of Western currencies over the two nation’s bilateral exchanges and could eventually open a new chapter in trade relations between Tehran and Moscow, the Chairman of the Iran-Russia Joint Chamber of Commerce Assadollah 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,” Asgaroladi said.
Iran’s Central Bank announced in January that it was stopping mutual settlements in dollars with foreign countries and that agreements on bilateral swap in new currencies will be signed.
In late February, Russia’s Deputy Foreign Minister Sergei Ryabkov said that Russia will boost military-technical cooperation with Iran once international arms embargo on Tehran are lifted following successful talks on the Iranian nuclear deal.
On January 20, Russian Defense Minister Sergei Shoigu and Iranian Defense Minister Hossein Dehghan signed an intergovernmental agreement on “long term and multifaceted” military cooperation in Tehran. This was the first time in 15 years that a Russian defense minister had visited Iran.
Russia, who built Iran’s first nuclear power plant in its southern port of Bushehr, signed a deal last November to build two more nuclear reactors, which could be followed by another six reactors.
Also in November, the Russian State Railroads Company announced plans to build a railway link from Russia, across Azerbaijan, to Iran. An intergovernmental agreement on building the railway is expected to be signed in July of this year and the Russian firm said that it will foot the bill for the project.
The FNA report also emphasized that the bank — once operational — will help elevate economic ties between Iran and Russia to “significantly high records”.
Although no specific date has been set for the establishment of the joint bank, the report by FNA suggests that it could happen in the coming months.