Iranians Withdrawing Financial Reserves From Europe

The Iranian custodians of the nation's foreign exchange reserves are apparently anticipating a risk that their European accounts could be blocked. They are acting accordingly:

Iran's central bank governor said the country had begun withdrawing assets from European banks, the Iranian Students News Agency reported.


"We transfer foreign currency reserves related to all sectors including oil foreign exchanges to wherever it is good for us and we have started this transfer," the agency quoted [Iranian Central Bank governor Ebrahim Sheibani] saying.

"Iran has started withdrawing money from European banks and transferring it to other banks abroad, " a senior Iranian official told the Reuters agency.

It was not immediately clear where the assets were being moved to, although reports have suggested that Iranian funds could be heading out of Europe to Asia.

Iran's assets in the US were frozen after the revolution of 1979, which saw the pro-Western Shah toppled and a clerical regime installed in Tehran.

It is difficult to estimate the amount of assets that Iran has abroad, but the Asharq Al-Awsat Arabic daily said that about $8bn (£4.5bn) had already been moved, mainly to Asian markets.

Other sources have put the total value of Iran's foreign assets at somewhere between $30bn and $50bn.

Iran 'moves assets out of Europe' 20 January 2006
Ref: WWC/ WWA/A23/004

Dear Persian Friends,

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We thank you in advance for your time.

Yours Sincerely
Mr.Liang Lei
Executive Director

Al Capone is reputed to have said Men with Briefcases steal more then men with guns.
Johnwilly says Western bankers are more Onest crooks then Easter bankers.
It would be interesting to know if they're putting money into Chinese banks. (Because they've got fcuk-all chance of ever seeing it again if they are.)

Odd thing is that the Asian banks are buying up US T-Bills. In the other words, in the event of war, the US may actually end up ultimately borrowing money from the Iranians to pay for it all. It's all rather perverse when you think about it...
Banking was until the recent "Drugs" industry the most profitable way of making money.
Money is made on loans, and the intrest is where the profit cums from.
In established 'Western' Banks you can only loan out a certain % of the money you hold. This is normally governd by the law of the country.
I do not know what the figure is but lets say you must hold 50% so can loan 50%.
Eastern bank either never had such laws or more likely never enforced them. They would loan 70% placing themselves in a dangerous position if big withdraws where made by depositors.
Eastern banks where very profitable but extreamly vunerable in event of a downturn. Eastern Financial crisis of 97 is an example. Japan had problems over Non Performing Loans for the last 20 years, Non Performing Loans where loans made to X and it where never expected to be repaid.
Bankin 101
Head down and dug in awaiting incomming.
jonwilly said:
Japan had problems over Non Performing Loans for the last 20 years, Non Performing Loans where loans made to X and it where never expected to be repaid.
See also: Chinese banks.

Pretty much everybody should be aware that there are huge building programmes in China- a big economic boom going on, right? Only trouble is that most of those big shiny buildings you see going up in Shanghai etc. are empty. Nobody is paying rent- the investment cannot be returned.

Here's where it gets tricky. Under WTO rules China has to eventually open up its banking system so that foreign banks can do business there. (Deadline is around 2009. IIRC) There are lots and lots of Chinese people- agreed? Chinese people really like saving their money, especially this burgeoning middle class on which the CCP relies. Now, think about what could happen once foreign banks, that offer better rates of return, start doing business. Lots of Chinese go to the state banks to get their money back- and it isn't fcuking there... what happens next?
Excuse me for talking in basic terms on the matter. I am no Expert on Finance.
There are big problems in the pipeline out here now and it's just a matter of time for a repeat performance of 9 years ago.
I agree 100% China is growing far too fast and the system will kick back and the world will have a hickcup.
I know a banker via the net and he used to pass on serious comment on finance out here.
He has now gone quite and its suspected that something big is going to happen this year.
Where I live the PM has just sold his Mobile Telephone Company a big earner. Happened very quick this weeks news top story. I was told by a local businessman three weeks ago he was trying to sell.
I know personally two Frangs (Westerners) who where invited down the ministry for a chat. One an internationally know Jurno and the other a website owner.
Both for the written word on matter not complementary to the system out here.
Hmm. Well I get the Stratfor newsletter and for a while now they've been saying China's likely heading for a big fall. Couple that with persistent reports of low-level civil unrest in parts of China (usually local peasants p1ssed off with CCP bigwigs screwing them over) and you get quite an alarming picture. So how does China distract the masses in the event of a major downturn?
AndyPipkin said:
Hmm. Well I get the Stratfor newsletter and for a while now they've been saying China's likely heading for a big fall. Couple that with persistent reports of low-level civil unrest in parts of China (usually local peasants p1ssed off with CCP bigwigs screwing them over) and you get quite an alarming picture. So how does China distract the masses in the event of a major downturn?
Not sure, but it will probably involve one of the following;

1. Free bootleg iPods
2. Baby pandas
3. Balloon animals
4. A Chinese version of Pop Idol
5. An invasion of Taiwan

China has special internal security Battalions, a mixture of police/army trained and they deal with serious outbreaks of pesant unrest.
The eastern coastal belt is creating wealth at an unsustainable rate. The western and inland regions are stil on the less that 1 $ a day economy and are providing a massive reserve of cheap labour. The old cheap ecomomies of the orient are screaming foul.
Many of the western states have a large Muslim population. Chinese muslims tend to be quieter then their Mid East nieghbours and are well use to the state trampling on them in past violent insurections. They might get 'troublesome' but they know the central government will not Pussyfoot with them.
Where I live there are many Chinese muslims who's ancestors came here long ago and they are no problem compare with the Islamists next to Malaysia.
I know bisinessmen who have a history of doing trade in China and they are of the opinion if China is left to it's own devices then it will remain non agressive and say that the Chinese do not have a history of exspansionism. (Tibet Tiawan are considereed traditional China) I have a friend in Brit embasy who is knowledgeable but he will not disscuss the subject of China these days, which makes me think it's becomming a more sensative area.
Thai Chinese dominate where I live and the thinking is Business is their main intrest. Syemour Stirling wrote a book on overseas Chinese and his line was that as China has it frequent internal problems more and more chinese leave and settle eleswhere just to get on with business.
For the Western Chinese pesant just scraping a living is hard work. Things are much better now under the current administration then in Mao's day.
I really don't think the Tibetans see themselves as 'traditionally part of China'.

How far would the PRC go to protect ethnic Chinese communities in the region? I'm thinking oin particular of the anti-Chinese riots in Indonesia a few years back.
From the Associated Press.

"Swiss officials were tightlipped over whether Iran's move might include Switzerland, which is not part of the European Union, or if it meant more Iranian money might be on the way. Peter Westin, chief economist for Moscow investment bank MDM Bank, said that Iran's good relations with Moscow made it a possible destination for Iran's foreign currency reserves.

"'In that sense Russia is a good option,' he said.

"Spokesmen for the Russian Central bank were not available Friday evening."

To protect its assets, Iran moves funds out of Europe

Ali Akbar Dareini
Jan. 21, 2006 12:00 AM

Free samovar with all new accounts over $10 billion?
Andy I don't suppose The Tibetans see themselves as Chinese, but I am assured that China considers Tibet as part of old China.
Some years ago the National Geographic did an exstensive artical on what China considers Her Sphere of Influeance.
With few exceptions, it is all of what we Brits would cosider as The Far East.
I do not have access to this artical but perhaps some more skilled board member can track it down.
I am not qualified to comment on China's attitude to their ex pats and hope that during comming week I will see some of my sources.
As for destination of Iranian wealth, well er Putins Roosha shurely no ones that crazy for Roosha has long coveted accsess to a warm blue water port. And the Swiss very good at holding other folks money as the Jewish survivors from the Holicust would tell.
Folks know where they stand with British Banking crooks.
Maybe Mr. Ebrahim Sheibani got "the phone call?"

From Deutsche Welle:

Iran on Saturday denied it has shifted funds out of Europe due to fears of economic sanctions over its nuclear program after a swirl of contradictory reports on whether such transfers had taken place.

A deputy central bank chief categorically denied that Iran was moving foreign currency out of Europe to Southeast Asia. The comments appeared to flatly contradict previous reported remarks by the bank's president.

"At the moment, Iran does not have any schedule to transfer its foreign exchange accounts to the named countries," Mohammad-Jafar Mojarad told the state news agency IRNA when asked if Iran has transferred the accounts to Asia.

The head of the central bank, Ebrahim Sheibani, had reportedly said on Wednesday that Iran was moving funds from Europe elsewhere after Western demands to freeze Iranian assets as a result of the conflict over Iran's decision to resume nuclear research.


Sheibani himself, however, on Saturday rejected the idea that such transfers had already taken place, even though he left the door open for such a possibility in the future.

"We will transfer Iran's foreign accounts whenever we believe it is necessary," Sheibani told state television.

"Iran Denies Shifting Assets From Europe" 21 January 2006,2144,1864047,00.html
Here's a somewhat ambiguous report which implies that the Iranian Central Bank is limiting the volume of euros and dollars in its forex portfolio by buying gold bullion.

Nation’s foreign assets up as gold price soars
TEHRAN, Jan. 24 (MNA) –- Iran’s foreign assets are on the rise as global gold price continues its upward daily trend. Meanwhile, the country’s foreign debts are declining and the nation’s economy is in good shape, governor of Central Bank of Iran (CBI) Ebrahim Sheibani announced here Tuesday.
He also pointed out that various exchange currencies – euro, dollar and yen -- comprise only portion of foreign assets and the rest could be in form of gold, equities and securities. In many analyses the latter is usually not taken into account, he added.

It should be noted that this report sheds some light on recent rather controversial statement given by the CBI on FRF transfer from Europe to Southeast Asia for security reasons.

The dollar price of gold has been in an uptrend since 2001.

This price trend lends itself to varying interpretations. One possible interpretation is growing market revulsion for the perpetual geyser of dollars and dollar denominated financial assets, as well as the rest of the world's irredeemable "fiat" currencies.

Since the 1945 Bretton Woods Agreement, the other currencies have been based on the dollar. Since Pres. Nixon suspended foreign central bank gold redemptions in 1971, the value of the dollar has been based on faith.
Or not.

From Reuters.

TEHRAN -- Iran's central bank has not implemented any measures in
preparation for U.N. action over its atomic program because it does
not believe sanctions will be imposed, the bank said Monday.

"We do have a contingency plan. We are prepared for any eventuality
but at the moment we do not feel sanctions are going to take place,"
Deputy Governor Mohammad Jafar Mojarrad told Reuters in an

"We are not repatriating our foreign exchange assets ... and there
has been no movement of any assets from, for example, any European
banks to any Asian banks," he added.

He said talk of such transfers had resulted from misquotes in the
Iranian media and also denied suggestions from gold traders that
Iran's central bank was buying up the precious metal.

"We have no intention of buying gold at the high price at the
moment ... we are not in the market for the time being and are not
going to be in the market," he said.

Less than 10 percent of Iran's assets are thought to be in gold.

January 23, 2006

Was it Bismarck who said believe no report until it's been officially denied three times?

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