Iran is no longer using the US dollar in foreign-trade transactions and is replacing it with other currencies, the deputy governor at the Iranian Central Bank Gholami Kamyab said, according to Sputnik News.
“In trade exchanges with the foreign countries, Iran uses other currencies including Chinese yuan, euro, Turkish lira, Russian ruble, and South Korean won,” Kamyab reportedly said.
He also reportedly added that Iran was considering bilateral currency-swap agreements, which would allow partners to exchange one foreign currency for the equivalent in the other currency. He did not explicitly name partners, however.
We can all make safe guesses as to the names of those other partners, I think.
It isn’t easy to build an alternative [to the Western banking system], and countries like China which depend on large flows of both investment and trade with the rest of the world, and whose financial systems are pointed toward greater rather than less integration with the global system are somewhat less eager about building an alternative than countries like Russia. Furthermore, lots of ne’er-do-wells like Venezuela, Argentina, or perhaps a Syriza-led Greece would love to join an alternative system thinking that it offers them new chances to stiff a new set of creditors.
Still, the more powerful the sanctions weapon becomes, and the more we try to use it, the greater the incentive we create for other people to challenge it.
Iran barely registers as small potatoes in global trade, but if they do find success in subverting sanctions by abandoning the dollar, they may pave new roads for Russia, China, and a host of rogue states like North Korea and ISIS.