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CNN citing sources: Talks between Washington and Tehran are close to reaching a comprehensive agreement that could be concluded during the next meeting.

Iran announces plans for joint financial institution with BRICS

  • By Al Mayadeen English
  • Source: Agencies
  • 4 Jul 2024 18:19
  • 1 Shares
3 Min Read

If Iran, Russia, China, and other countries utilize ruble, yuan, dirham, and rial in their transactions, significant barriers in bilateral trade can be overcome.

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  •  The governor of the Central Bank of Iran (CBI) Mohammad Reza Farzin pictured at the St petersburg economic forum on July 4, 2024. (MEHR)
    The governor of the Central Bank of Iran (CBI) Mohammad Reza Farzin pictured at a St. Petersburg economic forum on July 4, 2024. (MEHR)

Iran's Central Bank governor on Thursday announced plans to establish a joint financial institution among member states of the BRICS alliance.

During a gathering of Russian economists in St. Petersburg, Governor Mohammad Reza Farzin detailed Iran and Russia's determination to bolster bilateral financial cooperation by enhancing the use of national currencies instead of the US dollar.

If Iran, Russia, China, and other countries utilize ruble, yuan, dirham, and rial in their transactions, significant barriers in bilateral trade can be overcome, Farzin said.

The proposed financial institution mirrors the structure of the Financial Action Task Force (FATF) and aims to strengthen financial ties among BRICS nations.

Farzin also extended an invitation for Russia to join the Asian Clearing Union (ACU), an established platform currently including India, Pakistan, and Belarus, with Iran as a member.

Read more: Iran 2nd in oil production growth in 2023 despite US sanctions

The ACU provides a robust framework for reducing the dominance of the US dollar in financial transactions among member states, noted Farzin, underlining its potential significance in fostering economic resilience amid stringent international sanctions.

Iran's strategic pivot towards regional financial integration comes amid escalating geopolitical tensions and economic pressures.

Related News

Algeria joins BRICS’s new development bank

About 24% of BRICS investment transactions made in national currencies

It signals a determined effort to forge alternative economic pathways with like-minded nations.

Rise of de-dollarization trends

The dominance of the US dollar in global reserves has been steadily declining in the past ten years. China, the second-largest economy globally, has been reducing its ownership of US Treasury bonds while increasing its gold reserves. Other countries are following suit, especially since the onset of the weaponization of the dollar.

This trend is part of a broader global de-dollarization movement, with many countries diversifying their reserves by increasing gold holdings and using local currencies for international transactions.

China's gold reserves rose in the first quarter of 2024, contributing to the country's record-high foreign exchange reserves. Meanwhile, Japan, a US ally, has been selling off US bonds and shares due to concerns about the US economy's decline and escalating debts.

Read more: SPIEF sidelines: Russia may de-dollarize with Latino nations, BRICS

Chinese financial experts suggest that while the US economy's nominal GDP growth rate may seem positive, it is partly fueled by significant inflation, leading to accumulated risks.

As emerging economies like China outpace the US and its allies, they are becoming key trade partners for many countries, potentially diminishing US trade dominance.

The share of the global economy held by BRICS countries, including Brazil, Russia, India, China, and South Africa, is currently ahead of that of the G7 developed economies.

Concerns about US government debt expansion have led several countries to pursue de-dollarization strategies to protect their economies.

The US' growing national debt, which reached $31.46 trillion, poses significant financial risks, contributing to global debt levels that are deemed unsustainable.

  • BRICS
  • Russia
  • Mohammad Reza Farzin
  • de-dollarization
  • Iran

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