Iran Eliminates US Dollar from Forex Reserves

(Tasnim) – The Central Bank of Iran (CBI) has practically rid the country’s foreign currency reserves of US dollar, replacing them with the United Arab Emirates’ dirham, an official said.

Hossein Ya’qoubi, CBI governor for international affairs, told the Tasnim News Agency of a dramatic reduction in the country’s dollar-based transactions in recent years, particularly after imposition of unilateral sanctions on Iran over its nuclear energy program.

He said the decision to replace dollar with dirham in the country’s foreign currency reserves was made to minimize the risk posed by the fluctuation in dollar rates.

Back in May, an economic commission at the Iranian parliament proposed a motion that, if approved, will totally eliminate the dollar and euro in the country’s monetary transactions with foreign states.

Elsewhere in his interview, Ya’qoubi said Iran has proposed 9 Asian countries a plan for the establishment of a new financial system to be used as a replacement for SWIFT.

During the most recent meeting of the Asian Clearing Union (ACU), Iran unveiled a plan suggesting that members of the union –Bangladesh, Bhutan, India, Maldives, Myanmar, Nepal, Pakistan, Sri Lanka and Iran- employ a system developed by the Central Bank of Iran to get around SWIFT.

In October 2013, Iran developed a home-grown financial telecommunications system, whose acronym in Farsi is SEPAM, as a substitute for a global network brought by Society for Worldwide Interbank Financial Telecommunication, or SWIFT.

“The electronic financial messaging system (SEPAM) has been designed and implemented given the banking network’s need for establishment of an integrated, centralized and standard infrastructure for messaging in the country, and also with the aim of addressing the pressures in the wake of intensification of international sanctions, especially possible restriction on access to global connecting networks such as SWIFT,” Seyed Mahmoud Ahmadi, secretary general of Iran’s Central Bank said at the time.

In March 2012, SWIFT, the Brussels-based body that handles global banking transactions, cut Iranian banks from its system, making it almost impossible for money to flow in and out of Iran via official channels. SWIFT said it was forced by European Union sanctions to discontinue service to the Iranian banks.

SWIFT is a secure private network used by nearly every bank around the world to send payment messages that lead to the transfer of money across international borders.