The government’s punctuation was limited between 1.5 and 2.5 percent to curb inflation/bank balance sheet growth

According to the economic reporter of Fars news agency, last year, the central bank entered the balance sheet and money creation mechanism of banks for the first time in the history of this institution.

The policy to control the amount of balance sheets of banks was implemented in 1400, based on which the monthly growth ceiling of commercial banks’ balance sheets was set at 2% and specialized banks at 2.5%. This growth was such that a commercial bank could grow its balance sheet by 24% and a specialized bank by 30% during a year.

One of the criticisms of this framework was the lack of attention to capital adequacy and other banking standards. Specifically, experts stated that the balance sheet growth limit for a bad bank should be lower than that of an average bank, and the balance sheet growth limit of an average bank should be lower than that of a good bank. Bank standards determine whether a bank is good or bad.

In this regard, Ali Saleh Abadi, the head of the central bank, announced today the change in the scope of the growth of the banks’ balance sheets and said: the monthly growth ceiling of the banks’ balance sheets from 1.5% to 2.5% will be determined according to the indicators of that bank and will be announced to the banks.

He added: A bank that does not comply with these limits will be subject to paying a higher legal deposit.

According to Fars report, according to the speech of the head of the central bank, from now on the growth of the balance sheets of banks that have lower standards will be a maximum of 1.5 percent per month and the growth of the balance sheets of good banks will be a maximum of 2.5 percent. According to this rule, it seems that the balance sheet ceiling of medium-sized banks is set at a maximum of 2%.

This policy of the central bank has had a very significant effect in controlling the creation of bank money, so that in the first quarter, the growth of the balance of facilities granted by 11 stock exchange banks has decreased significantly compared to the same period of the previous year.

The amendment of the growth policy of the banks’ balance sheets, with a brief explanation by the Governor of the Central Bank, is another step in the direction of controlling the creation of bank money and the management of money circulation, which, with its continuation, will provide the basis for reducing the growth rate of liquidity and inflation.

In the same period, the growth of liquidity reached 34.7% in May this year from about 39% in August 1400, which shows the impact of banks’ balance sheet control policy on liquidity growth.

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