Philip Hammond met Valiollah Seif

Tehran – London banking diplomacy

 

Accompanied by a high-ranking economic-business delegation, British Foreign Secretary Philip Hammond met the Central Bank of Iran Governor Valiollah Seif and officials in Tehran on Sunday. The two sides emphasized the expansion of banking cooperation between Tehran and London.
According to CBI public relations department, following the meeting held in Mirdamad Headquarters, the CBI governor released the news about the resumption of operation of two Iranian banks namely Bank Melli, and Persian International Bank to assist the development of economic, business and banking relations between the two countries.
Referring to the operations of four Iranian banks before imposition of sanctions against Iran, Dr. Seif noted, “Despite willingness of both sides to increase economic and business ties in the past, some regulatory restrictions hampered the process and we now hope the obstacles would be removed”.
He considered the facilitation of banking, insurance, and transportation relations as the prerequisite for enhancement of exports and stated, “With its valuable experience, the Iran- England chamber of commerce can play an effective role in facilitating economic relations and eliminating deterrent regulations”. “Skillful human forces as well as unique regional capacities of Iran have provided positive conditions in the country”, said the head of Money and Credit Council pointing to litigation of investment risks in Iran.
While welcoming the presence of British investors in Iran, CBI governor indicated that establishment of investment boards are crucial for both nations and added, “There are ample investment opportunities in the areas of oil, petrochemicals, tourism, and IT in Iran. The Foreign Investment Absorption law has also made provisions to prevent probable investment risks”.
Seif highlighted the desirable rank of Bank Melli Iran in the British Bankers' Association before sanctions and said, “Iranian banks used to operate well in London and it is anticipated that their operations will resume after sanctions are lifted”.
In another part of his speech, Dr. Seif described Iranian economy as stable and its achievements as remarkable notwithstanding the sanctions.
“The inflation rate stood at more than 40% at the beginning of the 11th administration while it was reduced to less than 15% today”, he continued, “In two consecutive years, Iran experienced negative economic growth rates of -6.8% and -1.9%. The exchange rate also received severe fluctuations while those fluctuations have almost disappeared recently”.
He considered predictability of economy for investors as the prerequisite for investment in Iran which in turn necessitates economic stability. “The agreement made between Iran and P5+1 accelerates economic achievements and their realization”, he added.
He mentioned that the 11th administration plans to actualize single-digit inflation and unify exchange rates. “Having the nuclear deal been operationalized, international banking relations will be restored”, he said.
The CBI governor referred to the provisions made for the presence of foreign banks in Iran and emphasized that there is no limitation for the activities of foreign banks in Iranian free economic zones. They may also open branches and representative offices in mainland or hold 40% shares of an independent unit.
He pinpointed the resumption of relations between the central banks of Iran and England and proposed that a banking board comprising Iran and England officials could expedite the relations between the bankers of the two countries.



While describing a picture of Iranian economy and the negative impacts of fluctuations in foreign exchange revenues in the last three decades, he emphasized that the previous experiences have led the 11th administration to prioritize fiscal and monetary discipline.
 In the meeting, British Foreign Secretary Philip Hammond also expressed his satisfaction with the new conditions and demanded that the delegation to be made aware of economic challenges of Iran after the sanctions are lifted and also the measures which will be taken in this regard. He pointed to the willingness of British banks to commence their activities in Iran and added, “There is a huge appetite in England to engage in investments in commercial and industrial businesses of Iran and there is huge appetite on the part of our financial institutions to support that activity and to cooperate in resolving problems," he said.
He mentioned negotiations between the two countries as the prerequisite for banking cooperation and added, “The British government is committed to lifting of sanctions and will take the necessary measures via its embassy to foster economic and business relations. Meanwhile, we are making discussions with our counterparts in European Union and the United States so that the banks can initiate their activities upon removal of sanctions”.
He said that Iran has made positive achievements in its macroeconomic management and has provided suitable conditions despite restrictions. Given the removal of restrictions for asset transfer which will lead to delivery of a huge volume of resources to Iran, the economic institutions are eager to be informed of measures that Iran is going to take regarding mid-term economic stability.
He went on to say, “The truth in the 21st century holds that trade can expand when it is being backed by the banks. Once sanctions are lifted, we are all prepared to cooperate with Iran in various business and banking fields including interaction between the central banks”.
Anthony Browne, Chief Executive of the British Bankers' Association released the news about licensing two Iranian banks to start their activities in England. “Two Iranian banks have already received their licenses and we are enthusiastic to cooperate with Iran and remove the obstacles”, he said.

 

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