Vice governor for foreign exchange affairs:

Higher share of international payment systems in post-sanctions era

Higher share of international payment systems in post-sanctions era
Based on Geneva deal and lifting of banking and financial sanctions, all assets and funds belonging to Iranian government, CBI and other real and legal entities which are frozen in financial institutions will be released unconditionally on implementation date of the comprehensive plan of joint action to be used by their owners. Moreover, the Iranian government, CBI and other state enterprises may involve in activities such as issuance of bonds, issuance and sale of sovereign bonds, receiving loans from international institutions like World Bank or private European banks, clearance of dollar-based transactions via non-American banks, and accepting export guarantees from relevant institutions.
Removing international sanctions will also pave the way for presence of foreign investors including international banks in Iran.
In an interview with the public relations department, Mr. Kamyab, the CBI vice governor for foreign exchange affairs, talks about the opportunities arising from the deal for the banking system, future of CBI and banking network, provisions of CBI, and foreign investment in post-sanction era.

How do you see the prospect of foreign exchange reserves in Iran's economy given the Geneva deal and the possibility of lifting of sanctions? 
Iran deal with P5+1 results in expanding Iranian Central Bank's (CBI) balance based on FSI, asset quality, liquid assets and asset diversification. Besides, CBI's power on controlling foreign exchange market will be increased in a meaningful way. Having become effective, the agreement will release $ 29 billion of CBI's and the government's frozen assets. Consequently, export incensement for oil and non-oil products leads to an increase in foreign exchange revenue. Real demands for foreign exchange rise as a result of booming business while it will be possible to access short-term, mid-term and long-term credits. This helps the country's economy to flourish.

 What provisions have been made for CBI and the banking system in post-sanctions period?
 Iran's banking system has been far from competition in international banking industry due to UN sanctions and also because of EU and US unilateral sanctions. Banking standards including capital adequacy, asset quality, management, liquidity, earnings and systematic risk require improvements and basic measures. CBI and the other Iranian banks have already designed plans to converge on technical, humanitarian, organizational and management tools in global banking industry. Such plans are to be implemented after sanctions are lifted.
Increasing the share of international payment instruments including documentary credits instead of draft and also extending foreign short-term, mid-term and long-term LC, refinance facilities, and the like to finance real sectors, particularly production and productive services, are among CBI plans in post-sanctions period.

 How will the released assets be spent after sanctions are lifted?
Those parts of assets belonging to the government will be added to its budget.  CBI assets will be directed towards realization of its objectives in accordance with monetary and banking rules. Undoubtedly they will facilitate global trading, reduce the costs of foreign financing, establish production units and affect international transfers.

How much will Iran be prepared to absorb foreign investment? Are there favorable conditions for establishment of foreign banks in Iran according to global standards?
Lifting the sanctions expands banking correspondence based on Rial and foreign exchange regulations as well as monetary and banking rules. Moreover, interactions between CBI and top global banks of the world make it possible to benefit from their credit lines, banking knowledge and modern services. Such correspondence already existed before sanctions and there is no reason not to resume it in post-sanctions period. Luckily, we are well equipped with essential tools like IT and well-educated young workforce. We need to build trust and improve banking standards. It would not be easy, but it is manageable. We are not far from international standards; hence, foreign banks may start working in Iran. Obviously, the very presence of reputable global banks in Iran will result in improvement of banking standards. 

Some believe that unification of foreign exchange rate, a goal of CBI, is not currently possible due to global conditions. How do you analyze this opinion? Is there any special plan to implement this policy?
Unifying foreign exchange rate is a step-by-step process and it requires some preparations which are not limited to CBI. Fortunately, both the government and Islamic Parliament are determined to unify foreign exchange rate. This is a top priority for CBI. When sanctions are removed, it will be possible to transfer, convert and mange resources. This is the main condition for sustainable unification of foreign exchange rate.

What is your prediction for foreign currency market in the future? Given the economic stability as realized by the government, is there any possibility of another foreign currency crisis like what occurred in 2011?
Fortunately, foreign exchange rate has been stable for the last 2 years and foreign exchange shocks caused by oil price drop, changing the cost of assets like stocks, expectations of nuclear talks, etc. have been controlled and well managed.
CBI policy is to set the foreign exchange rate according to its natural mechanism considering requirements of macroeconomics. Obviously, in the coming months Iran deal affects fundamental variables of economy like production, investment, import, export, inflation, etc., thus, foreign exchange rate will follow its normal trend away from unleashed behaviour resulting from changes in fundamental variables.
Increasing the share of non-oil exports in foreign exchange market is a blessing which diversifies resources and stabilizes the inflow of foreign currencies. Focusing on the export-oriented policies in establishment of information systems, preparing correct statistics and good management of macro economy may prevent foreign exchange crises.
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