South Korea and Iran reached an agreement to maintain the won-based settlement system used for years for bilateral trade while seeking an alternative payment method that can expand economic ties between the two countries, Seoul officials said Tuesday.
“We agreed that the current won-based settlement system has no problem in continuing to operate. The existing accounts will remain,” a Finance Ministry official said.
The agreement came after a Korean delegation comprised of finance and foreign ministry officials as well as local bank officials held talks with Iran’s central bank representatives in Tehran on Jan. 31.
The current Korean won-based settlement system has been in place since September 2010, when the Korean government joined the United States-led international sanctions against Iran over its nuclear program.
The bank accounts at Woori Bank and the Industrial Bank of Korea that contain some 3 trillion won ($2.49 billion) were designed to bypass trade restrictions and allow the two sides to conduct trade without violating the embargo.
As international sanctions imposed on the oil-rich nation were lifted as of Jan. 17, Korean firms are allowed to freely trade with the Middle Eastern country.
According to Finance Ministry officials, the two sides also discussed ways to use the euro, Chinese yuan and Japanese yen for payments and clearances.
The officials, meanwhile, said talks on creating other payment systems were not concluded at the meeting.
“Iran has considerable trade with Europe so they prefer using the euro as a medium of trade,” an official said. He said more talks would take place in the future on this matter.
On some media reports that Iran wanted to convert the won it held in its accounts into another currency, the insider said that the amount concerned was very small.
“Iran naturally wanted to make more money out of the money it held, but the total it was to convert is far too small to actually affect the won-based settlement system,” he claimed.