South Korea and Iran agreed to maintain the current won-based settlement system while seeking an alternative payment method that can further promote bilateral trade and investment, the government said Tuesday.
Following recent talks held in Tehran, the finance ministry said the oil-rich country agreed to hold onto two Korean won accounts it has maintained over the years.
The move comes after the international community lifted its blanket sanctions imposed on Iran early this year as the country pledged to freeze its nuclear program
The two sides also discussed ways to use the euro, Chinese yuan and Japanese yen to create another medium for payment and clearance.
Officials from the finance and foreign ministries held talks with Iran's central bank representatives. Woori and the Industrial Bank of Korea (IBK), which control the Iranian accounts, were present at the gathering.
These bank accounts that contain some 3 trillion won ($2.49 billion) are owned by Iran and were created in September 2010 to bypass trade restrictions and allow the two sides to conduct trade, without violating the embargo.
Under this system, a South Korean refinery could purchase crude from Iran and deposit the money either into the Woori or IBK accounts. Iran's central bank would confirm the transfer and give the Iranian seller rial, which then concluded the transaction.
"Since South Korean companies bought more than they sold to Iran, the amount of money in the accounts has grown steadily over the years," a ministry source said.
The source, meanwhile, said talks on creating other forms of payment system were not concluded at the meeting.
"Iran has considerable trade with Europe so they prefer using the euro as a medium of trade," the official said. He said more talks will 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 mentioned is very small.
"Iran naturally wanted to make more money out of the money it held, but the total it was to convert is way too small to actually affect the won-based settlement system," he claimed. (Yonhap)