Iran and Russia are currently exploring the use of central bank digital currencies (CBDCs) and digital financial assets (DFAs) to facilitate trade between the two countries. This move comes in response to the various sanctions imposed on both nations by the US, the EU, and other allied countries. The goal is to create regulations and infrastructure that would allow for more seamless and secure cross-border payments using these digital assets. Iran’s trade attaché in Russia, Rahimi Mohsen, highlighted the potential for CBDCs to mitigate the impact of sanctions and simplify trade between Tehran and Moscow.
Maxim Chereshnev, the Chairman of Russia’s Council for the Development of Foreign Trade and International Economic Relations, emphasized the strategic importance of a CBDC-powered partnership with Iran for Moscow. He mentioned that the inability to conduct fiat trades in USD and euros has been costly for Russian firms, resulting in losses of around 20-25% in every trade deal. By leveraging CBDCs and DFAs, countries like Iran and Russia could improve transparency, enhance transaction security, and simplify trade transactions. This collaboration could also help Russia strengthen its influence in the Middle East and Central Asia.
Russian businesses have already started issuing DFAs and engaging in cross-border trade using digital rubles. President Vladimir Putin signed a law allowing Russian firms to conduct cross-border trade with Russian-issued tokens, but this law does not currently permit the use of other countries’ DFAs or CBDCs. Belarus, a Russian ally, is also moving towards implementing digital fiat projects, aiming to decentralize cross-border payments and reduce dependency on major global currencies like the dollar and euro. Additionally, Russian lawmakers are considering the possibility of conducting trade with China using digital rubles and China’s digital yuan.
The ongoing cooperation between Iran and Russia in exploring CBDC and DFA-powered trade solutions reflects their shared interest in bypassing traditional fiat currencies and mitigating the impact of sanctions imposed by Western nations. By developing regulations and infrastructure to support the use of digital assets in cross-border transactions, both countries seek to enhance the security, transparency, and efficiency of their trade relations. This collaboration could potentially lead to a reduction in trade costs for Russian firms, strengthen Moscow’s influence in key regions, and open up new opportunities for cross-border trade with other allies such as Belarus and China.
The escalating geopolitical tensions and sanctions imposed on Iran and Russia have generated a sense of urgency for both countries to expedite their efforts in adopting digital financial technologies. By leveraging CBDCs and DFAs, Iran and Russia aim to create a more resilient and efficient trade ecosystem that is less susceptible to external interventions and disruptions. This shift towards digital currency adoption also reflects a broader trend among emerging markets and their allies to reduce reliance on conventional financial systems dominated by Western powers and major global currencies. Moving forward, closer collaboration between Iran and Russia in the realm of digital financial assets could pave the way for a new era of trade partnerships and economic cooperation.
