9 Government and central bank measures to curb liquidity/reduce the speed of money printing and strengthen the governance of Rial
According to the economic correspondent of Fars News Agency, the negative growth of two tenths of percent of the volume of liquidity in farvardin The month of 1401 is a statistic that shows the success of the anti-inflationary policies of the 13th government. An approach that after 9 years to the negative growth of liquidity in farvardin The month of 1401 compared to March of the year 1400 led.
on this The basis of the volume of liquidity in Farvardin stopped at the border of 4823.29 thousand billion Tomans, previously in Farvardin 1392, the monthly growth of liquidity had become negative in the tenth government, but in the eleventh and twelfth governments, we were faced with a staggering growth of liquidity, which was the result of the government’s extensive borrowing from the bank. centralization and the creation of excessive money by the banking system.
Although the decrease in the volume of liquidity in one month is not the reason for the continuation of this trend, the anti-inflation policy package of the Central Bank has presented a clear perspective in this field to economic activists.
* Removal of the government’s salary from the central bank’s resources
According to the officials of the central bank, the government’s non-withdrawal of the bank’s resources in the form of interest and, of course, the control of the overdraft of the banking system by requiring banks to deposit collateral with the central bank are two important measures of the central bank in controlling liquidity.
According to the officials of the central bank, the government’s lack of withdrawal from the bank’s resources in the form of interest and of course the control of the overdraft of the banking system by requiring banks to deposit collateral with the central bank are two important actions of the central bank in liquidity control.
Based on this policy, which was adopted for the first time in the last few decades, instead of using the budget, the government uses the deposits of the state companies’ accounts with the central bank, and in case need of It will take advantage of the fact that this need has not been felt so far.
* Establishment discipline Government finance
According to experts Economical What has most of all caused the devastating growth of liquidity in Iran’s economy in recent years is the government’s overt and hidden budget deficit pressure on the banking system and the subsequent growth of the monetary base; An approach that is actually imposing a kind of hidden tax on people.
In this way, whenever the government balances its income and expenses instead of tax revenues through pressure on the banking system, the inevitable outcome of this process is the growth of liquidity and the increase of the monetary base, which is practically the financial domination of the government. on policy makers money result It can be.
Undoubtedly, the continuation of this success in controlling the growth of liquidity requires the financial discipline of the government and limiting unnecessary expenses and avoiding the use of non-economic projects. Besides this financial discipline, the deepening of the debt market is one of the other influential factors in controlling the growth of liquidity in such a way that It should be clear how much and until when we should supply and settle bonds, the settlement rate of these bonds should be clear, while the interest rate and pricing system in the fields of wage rate/goods and services rate and money interest rate are among other things that should be considered in the field. Cash control should be given serious attention.
* Strengthening Rial governance
In this regard, the Central Bank, by moving towards reforming the banking system, strengthening the governance of the Rial, using chain financing tools and controlling monetary variables, and at the same time managing interest rates in the interbank market, implemented its anti-inflation package, an approach that resulted in Controlling the growth of liquidity was the first step
experts for They believe that the financial dominance of governments Army Banking, actions over budget O, the bad faith of government companies in repaying facilities and pressure Army A bank to receive facilities, along with the sick structure of the banking system, such as overdrafts from the central bank, the weakness of the monitoring systems on the phenomenon of money laundering, and the weakness of the rial’s sovereignty in the structure of the country’s economic system have been among the factors that aggravate the growth of the liquidity rate in the country.
* Banking transformation document
In this regard, the 13th government, centered on the central bank, has compiled a document on the transformation of the banking system, a document that according to the government spokesman appointment The path of the banking system should be changed from “banking system destabilizing financial markets, economy and financing of non-productive sectors” to “banking system serving the financing of production and development projects”.
Moving from “only focusing on the amount of facilities and relationship-based lending” to “continuous, comprehensive and stable financing of producers and households” along with changing the role of “the central bank that compensates for the imbalance between the government and banks” to “the powerful, transparent and responsive central bank” Among them is the change of basic infrastructures, which, according to economists, will change the direction of banks and put their rich resources at the service of production and Iranian families; All these are mentioned as “transformational revolutions” in the section related to the bank in the transformation document.
In this regard, the central bank has designed a program to reform the structure of the banking system, a program that intends to restore authority and independence to the central bank and make this group a powerful arm for the development of the country, the main approach of this strategic reform program relationships Central bank with the government is to improve the relationship between people and banks and to improve the relationship of banks with each other.
One of the most important actions of the central bank, the implementation of which led to the most important factor in controlling liquidity growth in April this year, is the reform of the relationship between the central bank and the government.
* Reducing the speed of money printing
Decreasing the speed of money printing was another approach of the central bank to control liquidity in such a way that the growth of the monetary base from 42.6% in July last year reached 31.5% at the end of April this year, which indicates a slowing down of the inflationary money printing speed by 11.1%.
Newthe most The published statistics on the state of assets and liabilities of the banking network show that the amount of government debt in April 1401 compared to March of last year has reached 581 thousand billion Tomans with a decrease of 9 percent. While the government’s debt to banks had grown by 46.3% in April 1400 compared to April of the previous year.
* Bank overdraft control
The next step was to control the banks’ overdraft from the Central Bank’s resources; According to the available statistics, bank overdrafts this year have been reduced by half compared to last year; for The established basis for banks to overdraft from the central bank and receive credit lines in exchange for collateral with the central bank; In this regard, according to the head of the Central Bank, banks have been given the permission to issue special (general) term deposit certificates and there is no need for a specific permission from the Central Bank.
Also, in order to monitor the current situation of liquidity and inflation, the meetings of the liquidity control, monetary base control and banking system reform committees are being held on a regular basis, and the desired issues are progressing under the guidance of these committees.
* Forming the Financial Stability Council
The formation of the Financial Stability Council was another measure of the 13th government to curb the growth of liquidity. This council is a member of the Central Bank, the Program and Budget Organization of the Ministry of Economic Affairs and Finance, whose main purpose is to make urgent decisions to prevent the expansion of the monetary base, rather than the government’s income and expenditure. In such a way that it does not create money.
Another measure in this field is to modify the bond issuance process; In such a way that these financial instruments are traded in a financial market and the demand for these bonds is formed, and in this way, through the deepening of the debt market, this goal is achieved with the measures taken, according to the head of the central bank, the volume of these bonds is 95 thousand billion Tomans decreased to 75 thousand billion Tomans at the end of last year.
* Amending the balance sheet of banks
Reforming the banks’ balance sheets was another part of the reform measures of the banking system, in this regard, in order to control the growth of some banks’ balance sheets; According to the disciplinary programs prepared by the Central Bank, a certain amount of growth of the banks’ balance sheets has been considered from 1.5 to 2.5 percent, which the banks are required to comply with, and if they do not comply with these conditions, they will be subject to a higher legal deposit.
The production of frozen assets and the sale of surplus assets and the exit of banks from corporate governance are other important axes the most The main points of reforming the banking system are also strengthening the share of liquid assets in the balance sheets of banks, and in this regard, at least 3% of the assets of the banks should be in the form of liquid government bonds. This policy is because the banks can In times of need, check the liquidity of their bonds and meet their needs.
* Adjustment of government debt to banks
Adjusting the government’s debt to banks was one of the other measures taken by the central bank to control liquidity; For this purpose, various solutions have been planned, according to the Chairman of Central Bank of RaisPresident to The Central Bank, the Program and Budget Organization and the Ministry of Economic Affairs have given special orders that the approval of the President to pay the government’s debt to the National Bank is one of the results of the Central Bank’s follow-up in this field.
In this framework, the central bank has put written programs to strengthen the sovereignty of the Rial in the country’s economic system, which includes the separation of personal and commercial accounts in order to organize economic interactions and deal with the underground economy, and the release of the Rial cryptocurrency. and coordination with the relevant bodies in dealing with the phenomenon of smuggling, he pointed out that Effects These actions in Asnakes We will see the macro economy of the country in the next chapters.
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