Connecting Shatab and Mir Banking Network of Russia: A Strategic Move

Following the meeting that was held last week between the Governor of the Central Bank of Iran (Mohammedreza Farzin) and the Governor of the Central Bank of Russia, it was found that the project of connecting the Shatab banking network of Iran to the Mir payment network of Russia has entered the operational phase and will continue until the end of the month. In the future, the first stage of this plan will be available for Iranian nationals in Russia. Dr. Saeed Soleimani, the manager of Hermes Trade Development and Growth Company, has analyzed and reviewed this project and its operationality from an economic point of view, which we will discuss further.

Connecting Shatab and Mir banking network of Russia

According to Isna, during the meeting between the governors of the Central Bank of Iran and Russia, it became clear that with the implementation of the necessary infrastructure to connect the banking network of Shatab and Mir in Russia and its first phase will be operational by the end of September, Iranian merchants in Russia will be able to use Shatab cards. to receive rubles from Russian banks in the form of a bank mobile smart card (Amber).

Also, Russian nationals in Iran can also benefit from this possibility in Iran in the second phase of this project, and in the third phase, Iran’s Shatab cards can be used in stores in Russia.

You can follow the full report of this meeting from this link.

Is it operationally possible to connect Shatab and Mir banking network in Russia?

Dr. Soleimani, director of Hermes Trade Development and Growth Company, reviews as follows:

The project of connecting the Shatab banking network to the Mir of Russia is operationally possible, and from the banking point of view, it is considered a masterpiece project, and the performance of the Central Bank of Iran in this matter is very positive; But in the current situation where the country gives preferential currency to importers, this decision can make the trade balance between Iran and Russia negative.

Due to the fact that we have a preferred currency in Iran (because the Iranian government does not recognize the exchange rate of the Iranian market), as a result of the transaction between the Shatab network and the Mir network and receiving rubles in Russia, the transaction will be based on the Nima rate, and as a result, we will increase We will have rubles at the Nima rate in Russia, which will increase the importer’s access to imported rubles, and imports from Russia to Iran will increase.

But because the ruble’s access to the Nima rate increases and the ruble’s access to the free rate decreases, exports will not be attractive. As a result, in the long term, the volume of Russian imports to Iran will increase and the volume of Iranian exports to Russia will decrease. As a result, Iran’s trade balance with Russia will be negative. (Russia will be positive towards Iran and Iran will be negative towards Russia)

So is this decision wrong?

The answer is no. As we said, the project of connecting the Shatab banking network to the Mir of Russia is feasible and by the way an attractive project in which the Central Bank can also perform properly. But the “preferential currency policy” is wrong in this direction, and the wrongness of the preferential currency policy can lead to unpleasant consequences in the long run. In this situation, the helpful solution is to remove the policy of using preferential currency in the implementation of the Russian Shatab and Mir banking network connection project.

What are the consequences of Iran’s negative balance with Russia?

Due to the fact that we are in a currency strait in Iran, it is better to move in the direction of increasing access to our foreign exchange resources. With the negative balance of Iran compared to Russia following the implementation of the Shatab and Mir banking network connection project through the use of preferential currency, our imports will increase compared to exports. Therefore, we use more currency. That is, in a situation where we need to increase exports in Iran and increase access to foreign exchange sources, imports will increase and currency consumption will increase. This will eventually lead to an increase in the price of the currency.