In financial foreign exchange reports released from the Central Bank of Iran, the U.S. dollar will no longer be used as their currency of choice. Iran Central Bank Governor Valiollah Seif said the difficulties Iran faces from the dollar use warranted the decision. In 2012, the United States banned Iran from the SWIFT payment system controlled by the Federal Reserve and the U.S. Treasury. Iran had to maneuver the international markets by converting payments to euros and settling transactions through the Belgium-based SWIFT system. In 2013, the sanctions were so tough that they were not able to get enough dollars, and a hyperinflationary collapse of the rial ensued. Again, Iran maneuvered by selling dollars and buying gold. An oil for gold swap was arranged with India so that the Iranians could sell their oil. Gold was also used as a payment system with China and Russia for food and manufactured products. Since the nuclear accord, Iran has repatriated some $9.9 billion from the UAE, Britain, India, Greece, Italy, and Norway. Iran’s foreign trade is largely outside of the dollar, which makes it much easier to switch.
The rumors swirling around the governor point towards the adoption of the euro. Seif indicated that the change could happen within the next two months. “In other words, we have to set a currency as the basis of financial reporting that has better stability and greater application in our foreign trade.” Many trade agreements with Russia, Azerbaijan, Iraq, and Turkey have not come to fruition because of the trade imbalances stemming from the dollar. By adopting the euro, the concern about holding reserves in foreign countries has dwindled, and the fluidity that Iran will have in maneuvering global markets can now be realized. As countries free themselves from the dollar and use alternative forms of money, the U.S. hegemony will continue to erode, and the ultimate currency will be left standing.
“Money is gold, and nothing else.” – J.P. Morgan