Governor of the Central Bank of Iran Valiollah Seif said given the myriad of investment opportunities in various economic sectors, Iran has the potential to attract more than $3.5 trillion worth of investments over the next two decades.
“Iran’s 80-million young, educated population and its exceptional geopolitical position in the Middle East due to the country’s investment opportunities in sectors like oil, petrochemicals, transportation, urban development, agriculture and information technology offer the right set of circumstances for regional and international investors to benefit from significant amount of added value and economic gains by partaking in those projects,” he said.
Seif made the statements during an address to the Meeting of Central Banks and Monetary Authorities of the Organization of Islamic Cooperation Member Countries held on September 21-22 in Bodrum, Turkey, CBI’s official website reported.
The CBI governor hoped that strengthening financial relations with OIC member states would help materialize these capacities.
A study carried out by global consultancy firm McKinsey in 2016 had predicted a $1 trillion increase in Iran’s output over the next 20 years, translating into a 1% growth for the world economy.
According to the research firm, Iran will need to improve productivity and upgrade its industrial infrastructure to be able to attract domestic and foreign investments.
Seif noted in his speech that while international financial markets, especially in developed economies, are struggling with financial threats and instability, boosting multilateral financial ties between OIC members could be the key to achieve high national and regional economic growth.
“Under the circumstances, the role of OIC countries as the second largest intergovernmental organization (after the United Nations) is to maintain strong and stable financial relations,” he added.
He emphasized the religious commonalities enabling member countries to move in line with Islamic banking principles.
“Islamic banking regulations are not only good for boosting bilateral investments, but can also reduce the risks of financial markets to a great extent,” he said.
Seif noted that after the implementation of the Joint Comprehensive Plan of Action (the formal name of Iran’s nuclear deal with world powers) Iran has taken effective measures to expand its international ties, which helped set up many correspondent relations with foreign banks and finance deals with various countries.
Iran recently managed to finalize a stream of foreign finance deals with various countries from Europe to East Asia. The latest finance deals were the €1 billion finance deal between Austria’s Oberbank and the €500 million agreement with Denmark’s Danske Bank.
The CBI chief enumerated a number of important measures Iran took to resume its financial relations with other countries, including reforming banks’ financial statements in line with the International Financial Reporting Standards to improve banking transparency and updating regulations such as those dealing with capital adequacy ratios in line with the standards of Basel Committee and Islamic Financial Services Board.
Updating anti-money laundering and combating financing of terrorism measures, apart from boosting relations with international organizations like the International Monetary Fund, were among other moves Seif highlighted in his remarks to the annual event.
On the Sidelines
The CBI governor also held separate meetings with Turkey’s deputy prime minister and his Turkish and Pakistani counterparts to discuss further expansion of banking relations.
Seif suggested during his meeting with Turkey’s deputy prime minister that ahead of Turkey’s President Recep Tayyip Erdogan’s upcoming Iran visit, the two countries’ central banks convene a joint meeting, which was welcomed by the Turkish side.
During the meeting with the Governor of the Central Bank of Turkey Murat Cetinkaya, the two chiefs decided to hold an urgent banking workgroup meeting comprised of representatives from five Iranian banks and three state-owned Turkish banks.
Seif also elaborated on the recovery of Iran’s banking system after the implementation of the nuclear deal, following which the two banking officials signed a cooperation agreement.
Iran’s top banking official also met with the Governor of State Bank of Pakistan Tariq Bajwa to pursue the implementation of the previous agreements.
It was decided in the meeting that the two countries use their local currencies in bilateral trade within two weeks. They also discussed opening a branch of Bank Melli Iran in Karachi in the foreseeable future.