The two nations are exploring the use of Iran's crypto-rial and Russia's digital ruble for bilateral trade. The move is seen as a way to simplify trade transactions and resolve issues related to fiat currency conversion rates, which can lead to significant business operation costs.
Due to US sanctions, Iran and Russia are unable to make settlements in Dollars and Euros, Russia and Iran have switched to the use of national currencies, said Maxim Chereshnev, chairman of the board of the Council for the Development of Foreign Trade and International Economic Relations. However, difficulties arise with conversion. And also due to the inconsistency of the market rate in Iran with the state. "Starting payments through CFA and digital currencies of central banks can simplify trading", Chereshnev said with surity.
The two countries have strengthened their economic ties, with Russia being one of Iran’s largest trading partners. Russia has invested in Iran’s energy sector, and the two countries have discussed cooperation in areas such as transportation and infrastructure development.
Russia has recently passed legislation allowing the use of digital financial assets (DFAs), such as tokenized gold, for cross-border payments, which is a shift from their previous stance where such assets were not permitted for payments. This change is aimed at circumventing sanctions and facilitating international trade between Russia and Iran.
The practical implementation of these digital currencies and assets is still under development, with cross-border CBDC settlements expected to be possible starting January 1, 2025, following the establishment of the necessary legal framework in Russia. This collaboration marks a significant step in the use of digital currencies in international trade, particularly among countries facing economic sanctions.
Experts say that, CBDCs can significantly improve the efficiency of cross-border payments by reducing the time it takes to process transactions. Traditional cross- border payments can take several days due to the involvement of multiple intermediaries, but CBDCs can streamline this process.
As of March 2024, there are a few countries that have functioning CBDCs and are exploring or using them for cross-border transactions.
The Bahamas, Jamaica, and Nigeria have functioning CBDCs. Moreover, the 5-Nations group – Brazil, Russia, India, China, and South Africa (BRICS), along with new members like Saudi Arabia, Iran, and the UAE, are in the pilot phase of CBDC exploration for cross-border wholesale transactions.
Australia and China are among the countries piloting use cases for their CBDCs, which may include cross-border transactions.
Additionally, SWIFT, the global provider of secure financial messaging services, has been working on solutions to enable financial institutions to incorporate CBDCs and other digital assets into common business practices, which includes cross-border transactions. This indicates a growing trend towards the adoption of CBDCs in international trade and finance.
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