The actions of the central bank to intensify monetary discipline in order to control inflation
Asghar Abolhasani Hestiani, deputy official of the central bank, said according to the financial news news, citing the public relations of the central bank, the 13th government did not borrow directly from the central bank, and the result was that because it was managed under the guidance of the central bank, in the end In 1400, unlike in 1399 and other years, he was able to settle 55 thousand billion tomans in cash, and this cash settlement was very effective. did not request
Abolhasani Hestiani, appearing in the Economic Table program, said about the inflation rate: Inflation was 59.3% in September 1400, while this number reached 40.5% in July of this year compared to the previous year.
The deputy official of the central bank stated that all the activities carried out in the central bank and the government should lead to two results: this activity should lead to two results including controlling inflation and economic growth that can help control inflation and Together, let’s achieve the production that has been considered by the Supreme Leader for the past ten years, and especially this year has been named as the year of production, knowledge-based, employment creation.
Controlling liquidity growth in line with inflation targeting
He called the inflation target and inflation targeting very important and said: In this context, we must pay attention to what can control inflation so that we can achieve our goal, and the most important key is two points, one is monetary discipline and the other is financial discipline. ; The monetary discipline is the hand of the central bank, which is improving day by day with the statistics you mentioned.
Abolhasani reminded: If we want to establish monetary discipline in the country, it is obvious that we must control the supply and demand of money at the same time as demand for cash. If we consider these three axes as criteria; Then we get the answer of how we acted and why we reached these numbers.
He pointed out: In the supply of money, one part is the creation and supply of money, which is done by the central bank, and the second part is the creation of money, which the banking system naturally has in its nature, and we should have controlled it. In the money supply sector that was related to the central bank, we carried out inflation targeting and considered four key variables.
He added: The target number is such that we can reduce the liquidity growth from last year’s numbers to at least 15 to 20 percent in the first year and reach the figure of 30 to 35 percent. That is, the goal setting in the area of liquidity growth is about 30 to 35 percent at the end of 1401. Of course, our effort is to bring it lower than these numbers, but different variables have an effect.
The official of the central bank further reminded: If we consider this number, we set the monthly monetary plan based on it, and the economic headquarters of the government has also taken this plan into consideration, and for example, if the inflation targeting number for the month of June is currently We considered a specific number; In July, this number is adjusted and we plan where we are in each month and adjust the trend.
Referring to the liquidity growth figures, he explained: For example, we were considering an average for Farvardin, which can grow by 1.6 per month. But with the measures that the government started last year and we also started in the bank, it reached minus 0.2. In other words, the liquidity figure reached from 4,833,000 billion Tomans at the end of March 1400 to 4,823,000 billion Tomans at the end of February 1401, which means a negative growth of two tenths of percent.
The deputy official of Central Bank added: In May, when the removal of 4,200 Tomans had not been done until the 18th of May, we reached a 2.3 increase in liquidity. Therefore, the average growth of liquidity in the two months of April and May is 1.6, which means that we did not deviate from our goal despite the fact that in May, the currency was removed at the beginning of 4,200 tomans.
He continued: In June, with the removal of 4,200 tomans currency, we witnessed a shock in the cash demand and natural price increase in the market, which caused the growth of June to exceed 10% on a monthly basis. I had almost a third growth in liquidity, but with this correction, it tripled. In July, this trend decreased and reached about 4%, which indicates that we progressed well in the supply of money related to monetary variables.
The role of government financial discipline in controlling liquidity and monetary base
Abolhasani noted: If we can control the growth of liquidity and the monetary base, inflation will be controlled accordingly. Therefore, one of the important components in controlling the growth of liquidity was the relationship between the central bank and the government. Alhamdulillah, the relationship between the central bank and the government was like this. First of all, he did not borrow directly from the central bank and the result was that because he managed it with the management and guidance of the central bank, at the end of 1400, unlike in 1399 and other years, he was able to determine his salary of 55 thousand billion tomans in cash. to settle and this cash settlement was very effective that in 1401 again, contrary to decades of years, we asked the government not to ask us for a salary, although it is stated in the budget law that the government can request 3% of the budget, but this year it did not request the salary.
Regarding the net debt of the central bank to the central bank, the deputy official stated: One of the things that we deal with in a monetary basis is the net debt of the government to the central bank, which means that the government has some deposits with the central bank. The institutions and themselves make deposits with this bank, and these accumulated debts reached 160,000 billion tomans, and of course, it is natural that the government cannot settle this accumulated debt easily. But besides this, he always had more than 200 thousand billion tomans in deposits with the central bank (for example, last year). For the difference between the two, according to Article 125 of the Public Accounts Law, we asked the government to allow us to give them money from that area, and in fact, money was given to the government from the government’s resources, which was instead of borrowing from the central bank.
Regarding the differences of opinion in this matter in the media, he said: Sometimes there is a discussion in the media about the difference between the two. From the point of view of accounting and numbers, apparently and in nature, they are not different, but suppose, on the one hand, the government borrows ten thousand billion tomans, or ten thousand billion tomans is deducted from its deposit with the central bank. In this example, pay attention that when you give the central bank’s salary to the government, this salary starts to rotate with various increasing coefficients, the last statistic of which is above 8, it starts to create liquidity. Now, if you use the method of reducing liquidity, it is different from the case where you use hot money and add to money. Second, with the same measures we have taken, we will increase the liquidity growth above 60% to 35%. Therefore, these measures have also had an effect on the 12-month and monthly growth and circulations.
Central bank measures to control money supply by banks
Abolhasani said: Regarding the control of money supply, we were able to correct the first part of it, which is related to the creation of money by the central bank, by controlling the relations between the government and the central bank.
In the context of money creation by banks, one of the most important measures was to control the assets of the banking system, in which the central bank’s control program was initially such that we considered an increase of 2 to 2.5 percent per month for the banks’ balance sheets; 2.5 percent for specialized banks and 2 percent for non-specialized banks.
He continued: After the initial implementation and investigations and considering that we have three categories of banks including relatively good banks, unsound banks and unhealthy unsound banks and institutions, we came to the conclusion that it is not correct to treat all these banks equally; Therefore, we took into consideration the Camels index, which is one of the reliable standards in the field of bank rating, and localized it, that is, we took into account things such as overdrafts, compliance with disciplinary directives, performance in the interbank market, etc., and ranked the banks on Based on that, we rated and announced this rating to the banks in the first stage, and this rating was also the basis for the correction of the control of balance sheets, so currently, if we say that the monthly growth limit of the banks’ balance sheets is between 1 and 2.5 percent. We did not see all banks as the same, and it is clear from bank to bank what its situation is and what it should do.
The deputy official of the central bank added: Another axis in the field of controlling the money creation of banks is the penalty for non-compliance, and therefore, if the banks do not comply with the necessary conditions, the central bank will increase their legal reserve rate. Based on this, in the previous survey, it was found that 9 banks met the conditions. They did not comply with the requirements and therefore we increased their legal reserves.
Stating that the legal deposit limit was previously 13%, Abolhasani said: Recently, in August, the Money and Credit Council allowed the legal deposit limit to be increased to 15%.
He clarified: The review of banks’ performance is done quarterly, and if a bank can correct itself and bring its balance sheet to the desired number, its crimes will be reviewed again. We can reduce the legal deposit percentage or give points to the bank. .
The deputy official of the Central Bank continued: These are disciplinary measures, and we will start these measures with the same financial means and warnings, and if it is not done, we are in the process of obtaining the necessary permits to introduce the offending banks to the police.
He stated that it is possible that a bank’s non-compliance is not only related to this regulation and that the bank has other violations and it is not introduced only because of a specific problem, he added: for example, a bank’s violation of this regulation after warning And we warned, and if the bank has been able to correct it and has not done so, we will take it to the Money and Credit Council. Of course, a bank may not be able to make the desired correction in a certain period due to its obligations, which is also taken into account.
Abolhasani clarified: For example, we have banks in the private sector that take deposits, but this deposit does not come in their assets. We have one or two banks whose debt section increases in their balance sheets, which means they attract deposits but do not provide facilities. Therefore, dealing more seriously with delinquent banks is on the agenda of the central bank, because investigations are not limited to controlling assets and other things have been added that make it difficult for banks.
The deputy official of the Central Bank pointed out: Based on this, we are currently making the control of the balance sheets of the banks more complete than in the past, that is, we are going beyond the assets section and going to the liabilities section, and we are also controlling the deposits, which This issue is in the final stages of approval and regulation and we will notify you after it is finalized.
A member of the Money and Credit Council pointed out that until now the deposits of the banking system were not controlled and as a result some delinquent banks could attract deposits without restrictions and said: In fact, the bank used to take the resources and pay for the interest of the previous deposits and if a At one time, he used to pay facilities to the departments related to him. While if you control well and set a limit for attracting deposits, it is natural to limit performance.
The deputy official of the central bank said: A few years ago, Hazrat Agha’s order was to establish a liquidity management committee in the central bank, and now, fortunately, in the new period, two liquidity control and monetary base monitoring committees have been established in the central bank, which are among the most important. It is considered the most regular and probably the most productive committees in the central bank, and the liquidity situation and monetary base are controlled in these committees every week.
Completion and connection of central bank systems by the end of the year
Pointing out that there are dozens of systems in the Central Bank in different fields, Abul Hasani added: The transformation program that the Central Bank has considered is more than 60 projects, and these projects synergistically form the transformation of the bank, which is included in this program. Parts of it were mentioned and parts of it may not be the time to talk about it now; But for example, one of them is the issue of supervision and control over banks, in this context, the completion of the Samat system, as well as the issue of centralized banking, which is called core banking, and the connection of the systems to each other are among the issues that the central bank pursues, and this The process takes some time, so I think the completion of the systems will be finalized by the end of 1401; Although sometimes they work now.
He continued: For example, in the issue of connecting card readers and sales terminals to the tax system, which was very effective, we saw a complete clarification, and besides that, the fight against money laundering is in progress.
The deputy official of the central bank stated: If we can control the unsound banks this year in the form of reforming the banking system by clarifying the use of these systems and monitoring the flow of funds, I think we will be able to clarify in the next year or two. Let’s achieve the completeness that was in paragraphs 9 and 19 of the general policies of the resistance economy.
Appropriate actions have been taken in the field of currency supply and demand management
Abolhasani said: In the discussion of currency, attention should be paid to the two parts of currency supply and demand, and fortunately, in the transformational program of the Central Bank, very good measures have been taken in both parts of demand management and currency supply management.
He emphasized: In managing the demand, which can affect the exchange rate, with the coordination we have with the Ministry of Security and the ministries requesting currency, both in the registration of orders and in the field of service currencies, thank God, it has been done in such a way that there was no demand. is that we do not answer even in the last two quarters, the amount of supply was more than the amount of demand.
The member of the Money and Credit Council regarding the supply of currency also said: In this context, both in the Nima system, in which the currencies from exports are supplied, and in the Senate and in the organized market, the supply of currency is carried out. The currency supplier is a currency department. It is a part of the supply of foreign exchange that non-oil exporters supply, and fortunately, with the rates we have set, the motivation to bring foreign currency into these systems has increased, and you saw that the exchange rate is one of those rates in June due to Some issues that had been created came back and we hope that we can control these fluctuations.
Regarding the creation of a system that people can use to monitor the latest currency prices in exchanges online, Abolhasani said: Considering the dimensions and complexities of currency policies, as far as I know, hopefully by the end of the autumn season, the necessary transparency will be provided. It should be operationalized in this section.