The failure of the government to collect domestic dollars
The issue of lack of trust in the country’s banking system has now shown itself more than ever, and many economic and banking experts have warned many times about this lack of trust of the citizens in the instructions and the way of monitoring the country’s banking system, a warning that seems to be true if every As soon as it is not paid attention to, it can turn into a serious crisis, a crisis that will ultimately harm the country’s monetary banking system and the banking system, and of course the citizens will not be spared from this harm.
Although the central bank has announced for a long time that people can deposit foreign currency in banks and receive interest, but it seems that people did not accept this issue and prefer to keep their dollars at home rather than keeping them with banks.
This issue shows that people do not trust the banking system, and one of the main reasons is the bad faith of the Central Bank in the past years. In Mahmoud Ahmadinejad’s government, when people opened foreign currency deposits with banks, when they received the currency, the banks returned the Rial equivalent of the currencies to them on the pretext that they did not have enough currency, based on the exchange rate at that time, not the free market rate; This issue left a bitter memory for foreign currency depositors.
Mahmoud Jamsaz, an expert on economic issues, told Economy24 about the crises in the country’s banking system: “Now many of these banks are in a situation where their capital is not sufficient at all, and most of these banks have accumulated losses of more than 50% of their capital, and basically they should be declared bankrupt now; But it is not clear why the central bank insists on helping these banks to keep them active.”
This economist says about the state of the country’s banking-monetary system: “During the last 4 decades, Iran’s banking system has usually not acted in the direction of improving the general policies or in principle the tasks that were the responsibility of the central banks. One of the most important tasks of the central bank is controlling inflation, controlling liquidity and helping economic growth and adjusting the balance of payments. Our central bank has not been successful in implementing these tasks, because the banking system of the Islamic Republic does not have such a capacity. In the implementation of the elimination of usury from the traditional banking system, the law on usury-free banking operations was approved in 1982 and promulgated in 1998. It was supposed to monitor the performance and effectiveness of this law for 5 years, but it is still being implemented without any special changes.
A temporary banking law that has been in place for 40 years
Referring to the temporary nature of the banking law approved in 1362, he says: “This is the fact that when a time is set for the implementation of a legal resolution, it is useful that the operation of this law should be monitored and reviewed, and finally, the implementation status of the law.” It was evaluated, but it was not. This law, which was passed with the aim of removing usury from the banking system, over time, while becoming the most usurious banking system, has deprived the country of access to many modern instruments of monetary exchange in the world; Although the reform of the banking system has been in the order of the ninth and subsequent governments, this plan has never been implemented from the realm of thought to the realm of action.
This economic expert adds: “In line with privatization, several state banks were privatized and gradually new private banks and monetary and credit institutions were established and entered the country’s banking arena. Since our economic system is bank-centered, it was thought that banks play a very important role in financing productive investments, increasing production and employment, by aggregating people’s micro-deposits and granting facilities to the productive private sector, by having reliable financial resources. play economic growth. However, in practice, by entering into cooperative contracts, they granted facilities in the name of production, but for non-production matters, mainly to certain applicants connected to the founders of banks or rentiers and agents of supra-governmental powers, and by obstructing and asking for heavy guarantees, many applicants of the sector They dissuaded or deprived the real private sector from receiving credits and facilities, even regarding working capital loans.
Banks in the delinquency trap of certain customers
In the continuation of his conversation with Economy 24, referring to the situation of the banks and the arrears of the country’s banking facilities, Jamsaz states: “The non-return of a major part of these facilities to the banks by certain customers has added to the amount of outstanding claims of the banks, many of them with accounting operations, this They turn outstanding claims into current ones, to hide their dissatisfaction, and on the other hand, due to widespread corruption in financial and credit institutions, without the supervision of the Central Bank, thousands of billions of people’s deposits were looted, and these institutions were unable to pay the depositors’ principal. They stayed and declared bankruptcy and became one of the main causes of people’s distrust in the banking system.”
Referring to the issue of liquidity growth resulting from banks’ imbalances and its negative effects on the economy, this economist also tells Economy 24: “One of the factors of liquidity growth and inflation and consequently the exchange rate is the result of banks’ imbalances and also the government’s imbalance with banks.” Instead of improving the banking system and contributing to productive investments and economic growth, seemingly private banks operate with a way of prioritizing their personal and group interests by entering the financial markets and speculation and land transactions and the construction of residential units and towers. And they messed up the wealth, the financial balance and the distribution of wealth in the society for the benefit of a few properties and especially the eaters and rent eaters and therefore they have played a destructive role in the country’s economy. With this description, the accumulated loss of some of these banks is more than 50% of their capital; But the central bank insists on keeping them alive by injecting capital.”
He adds: “8 banks have a negative capital adequacy ratio and 5 banks have a capital adequacy ratio below 8%, which is the legal capital adequacy ratio determined by the Central Bank. Explaining that the capital adequacy ratio shows how much a bank can cover existing risks with its capital. This rate has been set by the Basel Committee at 12%.
Dr. Jamsaz continues: “As I said, the dissatisfaction of banks and the government is one of the important factors in the growth of liquidity and inflation, which leads to a decrease in the value of the national currency, an increase in the price of valid currencies, and the distrust of the society towards the financial and monetary officials of the country. . According to the statistics of the central bank, the government’s debt to the central bank until the end of November 1401 was about 173.4 thousand billion tomans and to other banks 531.7 thousand billion tomans, totaling 3.705 thousand billion tomans. Banks’ demands from the government lead to banks’ overdrafts from the central bank, which means an increase in the monetary base and liquidity growth; Therefore, until the government settles its debt with the banking system, there is no hope of liquidity control.”
Referring to the ineffective methods of the banking system to attract capital, this economist says: “Issuance of debt certificates that have been approved by the Money and Credit Council with a profit of 23% for the purpose of collecting people’s money and reducing liquidity, in a 50% inflation regime. It will definitely not be welcomed by the buyers, on the other hand, the proposed plan for opening a foreign currency deposit account is not very attractive for foreign currency buyers by providing a national card, because they have not had a good experience with foreign currency deposit accounts in the past. In withdrawing from their accounts, the depositors inevitably received the equivalent of their foreign currency deposits at the government rate, and in fact, the government’s goal was to collect currency from the people.
Currency crisis and the story of currency accounts
Referring to the inefficient system of selling foreign currency and the issue of foreign currency deposit account, Jamsaz told Ekhtoaz 24: “Now, the new plan of selling foreign currency quota by presenting a national card once a year and depositing foreign currency into the buyer’s foreign currency deposit account has been implemented since the beginning of this year. Must open with a deposit of 100 dollars or 100 euros before buying currency. These accounts are current loan type, short term savings of 3, 6 and 9 months and long term of one year. 5% of the Riyal value is deducted as a fee for withdrawing from the account. The purpose of this plan is to limit both the free market transactions and regulate the buying and selling of currency.
This economist also addressed the issue of foreign exchange reserves and the issue of selling oil below the price of Iran, which has practically imported less currency into the country, saying: “Although the central bank assures the adequacy of foreign exchange reserves, these statements are not consistent with the evidence, because in addition to The intensification of American sanctions, the consensus of European countries against the Islamic Republic has also been formed following the recent events inside the country and new sanctions have been imposed, which have narrowed and limited the ways of currency entering the country. The sale of oil to China with a 15% discount below the price of Brent, plus other transaction costs to circumvent the sanctions, is apparently done in the form of barter transactions; Therefore, selling 2,000 euros as a quota for each national card, while the government is in a foreign exchange crisis, is devoid of logic.”
Regarding the issue of currency stability, Dr. Jamsaz also tells Economy 24: “Controlling and reducing and establishing currency stability only requires the coordination of the government’s financial policies, especially in the direction of reducing government expenses and eliminating or minimizing the cost of non-governmental institutions on the one hand and the monetary policies of the Central Bank. In non-payment of state loans and preventing the increase of the monetary base and monitoring the performance of banks as much as possible and prohibiting banks from entering into any non-banking commercial activity and speculation and profiteering on the other hand, and in the field of foreign policy, the transformation of diplomatic relations with The East to establish balanced diplomatic relations with the East and the Western world and to resolve tensions in order to expand economic, commercial and banking relations in order to achieve a positive trade balance and the entry of foreign currency into the country, is one of the requirements to achieve currency stability, which with changes and transformations in the structure A political state economy will be possible.”
Economics 24- Mira Ghorbanifar