My Persian 7 axis of reforming the relationship between the central bank and banks in order to deal with the creation of liquidity

According to the economic reporter of Fars news agency, one of the main policies of the 13th government, which received the attention of the government’s economic team from the very beginning, is “controlling inflation”, “controlling the increase in the monetary base” and “reducing the growth of liquidity”.

In the past years, Iran’s economy has experienced inflation higher than the long-term average level due to various reasons such as sanctions, exchange rate jumps, blocking of oil revenues, as well as an increase in liquidity, and this issue has caused economic and livelihood problems for people, especially people with Income is down.

With the aim of reducing the effects of inflation on people’s daily lives, the 13th government and the central bank have made controlling the growth of liquidity and the monetary base one of the most important priorities of their economic policy.

* Decreasing trend of liquidity and monetary base growth rate statistics

According to statistics, the twelve-month growth rate of liquidity in the second half of 1400 has been decreasing, so that the growth rate of liquidity has reached 36.3% at the end of 1400 from 40.5% at the end of September 1400. At the same time, the liquidity growth at the end of 2019 was equal to 40.6%.

Also, the monetary base grew by 31.4 percent at the end of 1400, which shows an increase of 1.3 percentage points compared to the growth of the same period of the previous year (30.1 percent). The year 1400 was also a significant decrease and reached 31.4% from 39.5% at the end of September 1400.

The growth of the monetary base during the first two months of 1401 (at the end of May 1401 compared to the end of the previous year) was equal to 6.5 percent, which is about 0.9 percent decrease compared to its figure in the same period of the previous year (7.4 percent). Gives.

The net foreign assets of the Central Bank as one of the basic monetary sources during the first two months of 1401 (at the end of May 1401 compared to the end of the previous year) decreased by 5.4%; While this variable shows an increase of 1.5% in the same period of the previous year.

During the first two months of this year, the growth of monetary base and liquidity, despite the implementation of the popularization plan and the fair distribution of subsidies, has enjoyed a suitable trend in accordance with the plans of the monetary policy maker.

According to Central Bank statistics, the monetary base has decreased by half a percent in June this year compared to the previous month, and the liquidity growth in the first quarter of this year has decreased by one percent compared to the same period last year.

The central bank’s claims from banks is another source of monetary base, which shows a decrease of 6.1 percent during the first two months of 1401 (at the end of May 1401 compared to the end of the previous year). This decrease is more than the decrease of this variable in the same period last year (1.2 percent decrease). This issue is mainly due to the strengthening of the management and organization of bank overdrafts and credits granted to them by the central bank during the said period.

In June of this year, the amount of net foreign assets of the Central Bank decreased by 4.1% to 545 thousand 60 billion tomans, which decreased by 4.1% compared to the end of last year and increased by 13.8% compared to June of last year.

* Central Bank’s serious pursuit to reform the banking system

Ali Saleh Abadi, the head of the Central Bank, says about the reform of the relationship between the Central Bank and the banks: Currently, in the field of the banking system, the Central Bank is paying special attention to the control of the banks’ debts to the Central Bank, so that the process of receiving the credit lines of the banks from the Central Bank is relatively It has decreased by 50% compared to last year.

Therefore, the report “Central Bank’s Intelligent Supervision of Facilities and Transactions in the Banking Network”, “Reform of Asset and Capital Structure of Banks”, “Improvement of Risk Management System”, “Transparency of Financial Reporting in Banks”, “Regulation of Non-Banking Activities of Banks and Their Subsidiaries” “, “preventing resources from entering into speculative activities” and “selling surplus assets of banks” are among the most important axes of reforming the Central Bank’s relationship with

Mostafa Qamariwafa, General Director of Public Relations of the Central Bank, says in this context: The Central Bank succeeded in following the threefold reform of the banking system in recent months to put the annual growth rate of liquidity and monetary base on a downward path in the spring. Monetary and banking reform policies in the central bank will continue to support the production and control of liquidity and inflation.

* Reducing the liquidity creation process in the banking network

Examining the trend of changes in the balance of deposits and Riyal and foreign currency facilities of banks and credit institutions in 1400 also shows that the growth of both mentioned variables in 1400 compared to 1399 has decreased, so that the twelve-month growth rate of facilities from 55.5 percent At the end of May 1400, it has decreased to 48.3% at the end of March 1400; Also, the twelve-month growth of deposits has reached 42.7% from 47.3% at the end of May last year to 42.7% at the end of March 1400.

* Payment of government and banks is the factor of creating liquidity

In this regard, Kamran Nedri, a university professor, in an interview with the economic reporter of Fars News Agency, says: a major part of money creation by the banking system is due to the government’s interventions, these interventions in the past years in the interest rates, facilities and contingent loans imposed on the banking network. It can be, it has been. These issues along with the wrong behavior of the banking system have all led to the creation of money by the banking network.

He continued: Of course, the banking network does not mind this method, and on the other hand, when the government intervenes, it also gives concessions to the banks to oblige them to implement the government’s policies, otherwise they will not implement the government’s policies. A trade-off is formed between the government and banks, and the result is a severe liquidity creation and high inflation in the country.

* Registration of the campaign to deal with the creation of liquidity of banks in Fars Man

According to Fars, the audience of the news reporter, in the Fars Man system, registered a campaign titled “Preventing the creation of liquidity by banks to control inflation” and wrote: “According to the general economic experts, the main cause of inflation and the instability of commodity prices in the market, not to America, It is related to Europe and JCPOA and not to the currency of 4,200 Tomans. Even with the signing of JCPOA, we will see a decrease in currency and commodity prices in a short period of time. Therefore, careful and calculated monitoring of banks’ liquidity production, especially private banks, is the only solution to Iran’s financial and economic crises. Also, the main election promise of the respected president was to control the creation of liquidity, and no effective efforts have been made in this field until today.

Therefore, according to the report, the Fars news agency, according to the mission it has defined for itself regarding the follow-up of Fars subjects, will definitely put the follow-up of this issue on the agenda and will demand an explanation from the authorities. If you wish, other users can join the signatories of this campaign; When the signatures of this campaign reach 1000 signatures and above, Fars News Agency will definitely follow up on this issue.

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