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REPORTING FROM WASHINGTON -- The Obama administration said Thursday that it was actively considering sanctioning Iran’s central bank in retaliation for an alleged Iranian bombing plot, a move that could severely damage Iran’s economy and potentially provoke a strong response from Tehran.

David Cohen, the Treasury undersecretary for terrorism and financial intelligence, told the Senate Banking Committee that officials were “looking very actively” at such a step and might carry it out if other nations could be persuaded to follow suit.

The potential blacklisting was the first specific step the administration has identified as a possible response to an alleged Iranian plot to assassinate Saudi Arabia’s envoy to the United States and to attack embassies in the U.S. and Argentina.

Iran has called the U.S. allegations a ‘fabrication.’

Such sanctions would aim to isolate the Bank Markazi, or central bank, from the world economic system by barring any firm that deals with it from doing business with U.S. financial institutions. That would make it far more difficult for Iran to sell crude oil, which funds much of the government’s activities.

Some Iranian officials have warned that they would look on such a move as an act of war. The sanctions would probably be effective only if other world powers joined in, and the administration would have to overcome arguments that ordinary Iranians and oil markets would also be harmed.

Cohen told the committee that if other countries joined in, the sanctions “could further isolate the central bank of Iran, with a potentially powerful impact on Iran.”

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