ECB defends payments system in Iran sanctions debate

FRANKFURT Thu Feb 21, 2013 4:21am EST

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FRANKFURT Feb 21 (Reuters) - The European Central Bank on Thursday defended its payments system after a newspaper reported that the U.S. Congress is preparing new Iran sanctions to target the ECB's system for settling cross-border payments.

The proposed bill is aimed at pressing the ECB to do more to prevent Iranian companies and banks from using the Target2 payments system to conduct transactions involving euros, the Financial Times reported.

The ECB said it complied with European Union sanctions against Iran.

"The ECB ensures that no illegitimate transactions are cleared in Target2," a spokesman for the euro zone's central bank said. "But any sanctions are EU sanctions and not an ECB competence."

The United States and the European Union have imposed sanctions on Iran that aim to slow funding to Tehran's nuclear program. The West says the program is developing nuclear weapons, a charge Tehran denies.

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