Opening Iran’s Domestic Market to International Banking

Fars News Agency reports that Iran’s minister of Economic Affairs and Finance announced last week that Iranian government welcomes international banks’ presence in Iranian domestic market. Speaking in a gathering of bank directors he told them that the necessary preparations are completed for international banks to open their branches in Tehran and other Iranian cities. In its latest dispatch Fars News Agency reports that 44 foreign banks have offices in Tehran and most likely they all will be allowed to open branches in Iran to offer consumer level banking services.

This marks a milestone in liberalizing Iran’s economy. For long international banks had been considered as the instruments of international capitalism in Iran by intellectuals and revolutionaries alike. The government absolute control of banking sector had been warranted to protect the country. However Iran’s 2020 vision promises an active private banking sector with dynamic links with global banking community. Reluctant to lose their control of economy neither President Khatami’s reformist administration nor President Ahmadenejad’s radical cabinet was eager to follow this goal vigorously.

It seems it has become a matter of national prestige to expand such ties and to open Iranian domestic market to global banking. Ironically efforts to isolate the country have crowded out those who oppose an open economy in Iran. Currently many parties are motivated to defy these efforts by inviting foreign banks to operate in Iran. If they succeed this will set up the infrastructure of an open economy in Iran by encouraging Iranian policy makers to accept a private banking sector with international ties. And that is ironic.

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