By Parisa Hafezi
Any U.S. move to impose sanctions on the Central Bank of Iran could add to the woes of the world's financial system although the Islamic Republic will find ways to protect its assets, the governor told Reuters.
The U.S. Senate banking committee approved a bill last week urging the U.S. administration to designate Iran's central bank a supporter of terrorism, a step that would trigger sanctions.
The United States has already imposed sanctions on some big Iranian commercial banks, part of an effort to isolate Tehran over its disputed nuclear programme. That step has encouraged many Western banks and businesses to steer clear of Iran.
"The world today faces some financial crises and all economic experts believe that the world's financial system needs stability," Central Bank Governor Tahmasb Mazaheri said in an interview on Monday.
"At least measures that may destabilise or make the international financial system less stable should be avoided."
"Possibly, the U.S. Senate has not paid enough attention to the point that there is a difference between the essence of a central bank and other banks," he said.
Central banks, protectors of nations' wealth and financial supervisors, should not be dragged into politics, he said.
The United States accuses Iran of seeking to build nuclear weapons and has targeted banks, including those it accuses of being involved in the nuclear programme of backing terrorism.
Iran, the world's fourth largest oil producer, denies the charges. Tehran says its atomic plans are to make electricity. But its failure to convince world powers has prompted three rounds of U.N. sanctions, which have also targeted some banks.
"If in the very unlikely event it happens (and U.S. sanctions are imposed on the central bank), the world is such a huge place that Iran … will not face problems that cannot be solved," Mazaheri said.
BROADER IMPLICATIONS
"It may be costly for us but there are various ways to resolve our problems," he said without elaborating on methods.
"A wise nation always finds ways to preserve and protect its assets from those who target a nation's assets and interests."
Iranian media in June reported that Iranian banks were moving funds from Europe, with one report suggesting as much as $75 billion had been withdrawn and converted into gold or placed in Asian banks, because of a threat of tightening sanctions.
Banking officials denied that report, as did the governor.
"All these reports were baseless, both withdrawing the assets and the amount of withdrawal."
But Mazaheri said sanctions on Iran's central bank would have broader implications for the world financial system.
"If the monetary and fiscal structure of a country is altered, then those of other countries can be questioned too."
Sanctions would also hurt foreign firms looking to invest in Iran, which sits on vast oil and gas reserves.
"Despite all plans and preparations, the fact is sanctions will harm all involved parties. Sanctions are costly for us and for other countries, including those companies who cannot invest in the Islamic state because of sanctions."
Iran's energy fields are a big draw but several big Western firms such as Royal Dutch Shell and France's Total, have recently scrapped investments or said they will not invest now. Russian and Asian firms have often stepped in.
Economists say sky-high oil prices have given Iran a cash cushion to help it cope with restrictions that imposed higher trading costs.
The governor did not give a figure for Iran's foreign exchange reserves, most recently put at about $80 billion.
Iran has previously said it was diversifying its reserves away from the dollar in part because of sanctions but also because of the U.S. currency's weakness. Most of Iran's oil trade is now in other currencies, although prices remain in dollars.
