Turning bankrupt banks into destructive zombies
According to the report of Iran Economist, the scientific-expert meeting titled “Banks’ disharmony; Challenges and policy recommendations”, with the presence of Hamid Bogar; Vice President of Economic and Infrastructure Coordination and Supervision, First Vice President as scientific director of the meeting and Gholamhossein Taghi Nettaj; Associate Professor of Accounting of the University and expert in monetary and banking field and Ali Saadoundi; Lecturer on banking and macroeconomics was held.
At the beginning of this meeting, Hamid Bogar; The deputy of coordination and economic and infrastructure supervision, the first vice president, while expressing the importance of paying attention to scientific issues in order to strengthen good governance, said: We have to accept that we are facing the phenomenon of disharmony in the budget and banking system.
Referring to the issue of bank overdrafts, he said: Bank dissatisfaction is not only limited to overdrafts. The performance of the banks themselves as well as the imposed laws strongly affect the performance of the banks.
Referring to the importance of finding a workable solution and avoiding a mere pathological view, the associate professor of the Department of Economics of Tehran University continued: I hope we can find practical ways to solve the problem of banks’ imbalances in this meeting.
Also, in the summarizing section of Netaj’s speech, he pointed out that the imbalance is the result of a historical process, and said: This is a correct view that in order to control the existing imbalance in the banking system, attention should be paid to the sequence of this historical event so that it can be controlled.
In the continuation of this meeting, Gholamhossein Taghi Nettaj; The associate professor of accounting of the university and an expert in monetary and banking field, as the opening speaker, while expressing the importance of unveiling the bill of the 7th development plan of the country, said: “Now is a good opportunity to be able to help reform this proposed structure with different lenses, due to the existence of the bill.”
Referring to the imbalance of inflation in Iran, he said: supply, demand and liquidity are the three main factors affecting the formation of inflation, and in our country the third factor has been more influential, and unfortunately the phenomenon of “stagnant inflation” has caused more poverty in the country.
Referring to the strategic mistakes in the country’s banking system during the past decades, this researcher in the field of economics pointed out: Ignoring the unity of the central bank’s supervision in the late 1960s was the beginning of this wrong process, which continued until 1995 and in the 1990s. And fifth, this supervision was visible in an outward form, and on the other hand, our next mistake was to privatize banking in a situation where the conditions for it were not yet ready in the country, and the next mistake was to impose public sector costs on private banks, which is still going on. The next error is the traditional view of money as a private good.
Referring to the growth of liquidity since 1957, he added: the volume of liquidity has increased 8 times on average in every government.
Referring to the concept of “zombie bank” in the global economic literature, Taghi Netaj said: destructive banks act when banks are in trouble. “Liquidity Equation”, “Assets and Liabilities Equation” and “Profit and Loss Equation” are the three main equations of banking that if banks do not act properly in these three equations, they will turn into destructive banks or zombie banks.
Pointing out that this trend has emerged several years ago and the current managers are heirs to the decisions of the past, he added: The damage in this field is divided into three parts, the most important part of which is the upstream field and governance of the banking system.
Referring to the principles of usury-free banking, this researcher said: According to the teachings of Martyr Sadr and Islamic thinkers, this law, which has been approved as a trial since 1962, is still awaiting reform, which we must say now, if the same law of 1962 is implemented , is better than the current situation.
Pointing out that the rate of money is 25%, he said: However, we are forcing the bank to pay the loan at a rate of 12% through an order process, this is a manipulation in the banking system. Government borrowing from banks is one of the other things that causes problems for banks. Like what happened to the National Development Fund, it is happening to the banks as well.
Referring to the problem of dissolved financial cooperatives, Netaj considered this phenomenon as sweeping garbage under the carpet and continued: Banks are facing many problems in the gaps caused by weak international communication and cooperative banking system, as well as the existence of unusual non-current claims from other banking problems. is the country
This former official of the banking system said in the review section of the country’s banking system model: We have banks that have been operating unbalanced for 20 years. If there is no plan for the failed banks, their situation will become worse every day. On the other hand, with non-specialized audits, no one will notice the deviations within the bank, unfortunately, we may be faced with bank accounts at some times.
Taghinataj pointed out that risk management in banks is a decorative phenomenon and continued: In general, the banking system has not performed well in the past four decades. Therefore, we must have a fundamental review regarding banks and we must know that the independence of the central bank does not mean confrontation with the government. It is harmful to continue the activity of private banks. In fact, the continuation of this activity imposes high costs on the country’s economy, and I also believe that large personal deposits should also be audited to see where the origin of these deposits was.
Pointing to the importance of investigating the origin of large deposits, he added: sometimes these wealths are based on a strategic mistake and few people use these sources, so the origin of these unusual wealths can be controlled with a careful audit.
In the continuation of this meeting, Ali Saadoundi; The professor of banking and macroeconomics, pointing out that we are facing the danger of hyperinflation, said: we have to ask, why am I distancing myself from science and human knowledge in the field of economics? If we have the first empire in the world, also our religion always agrees with rationality, but why do we not use rationality in the field of economy.
This economic researcher said: We have gone through the inflationary process for 52 years. Inflation also means that we take from the pockets of the lowest people in the society and give to the highest level of the rich people in the society.
Referring to the phenomenon of capital flight from the country, Saadoundi said: Foreign investment is desirable if a person is in the country and invests in another country, but in the case of capital flight, which means saying goodbye to capital forever, we are facing a dangerous phenomenon.
Referring to the 1997 warning about the phenomenon of pseudo-money, he added: “Last year, we witnessed the conversion of pseudo-money into money, and this caused the currency crisis in the country, in this connection, any pseudo-money that exists for bank deposits in the country.” Let’s face it, we have actually taken an action against national security, which can lead to unfortunate results, and unfortunately, despite this, everyone tries to emphasize the past path and does not try to reform the structure.
Pointing out that even in the 7th development plan, he said: “Unfortunately, in the current bill, not much thought has been given to solving the banking system’s super challenge.”
This banking system researcher continued: Private banking should be subject to serious revision, but public sector banking has not performed so well either.
Referring to the model of other countries in the administration of the banking system, he said: For example, in England, five banks perform 90% of banking operations.
Regarding the need for transparency in the country, Saadoundi said: Building a bank is like building a nuclear power plant, it is like building an airplane, and it has countless subtleties, so it should work for private sector banking, but with extensive supervision and detailed training, as well as banking for The creation of money requires the support of the government, because the creation of bank money is a sovereign act.
Explaining the ideal banking perspective, he said: Banks should be under the market and under extensive government supervision, so banks should clearly state all their loans. In many countries, all people who receive money from the government must be informed and the “whistleblowing” law must be properly implemented.
Saadoundi added: Small institutions are not allowed to create money, but they use big banks. Unfortunately, at the moment, we collect all the resources from deposits from all over the country and make them available for withdrawal in banks in the north of Tehran. The actual phenomenon is regrettable.
Referring to the poverty traps in different countries, he emphasized the need to intensify supervision and said: small banks can complement big banks.
Referring to the deviations of the bank balance in the country, he said: 70% of bank resources are allocated to production working capital, which means 70% of bank resources are allocated to producers’ warehouses. In fact, in this mechanism of providing capital, exploitation is taking place in our country.
Pointing out that we have punished the depositors in the last four years, Saadoundi said: if the virtual money is drained, the government will lose all its tools in the country and hyperinflation will arise in the country.
This economic researcher said about the proposal to leave the current situation: the foreign currency and Riyal budgets should be separated. In fact, the exchange rate is the official phenomenon of money creation in the country, so we must control this phenomenon by separating the foreign currency and rial budgets.
Referring to the bank that has been in trouble since the first day and claims to be private, he said: Where is this private bank? Is a bank created by loans private? Now, a bank that has been loss-making from the beginning, how can it continue. This money-inventing machine should not continue to exist for even one day, therefore, the closure of banks can lead to the bankruptcy of other banks, therefore, all previous bank managers should be blacklisted in the banking administration and new managers should be created in order to fix the country’s banking system. .
Saadoundi emphasized the principle of banking independence and said: Inflation control has happened in more than 180 countries of the world, but why are we not successful?
While referring to the historical debate about the phenomenon of budgetary and banking imbalances in the country, he said: “Unfortunately, the wrong approach that we can progress quickly due to the existence of energy resources, especially oil, is still continuing.”
Pointing out that for many years foreign exchange earnings have been completely spent, Saadoundi said: This phenomenon has created a lot of inflation for the country. In fact, this phenomenon of inflation is rooted in the way we look at domestic resources. When we spend the currency from the sale of oil and do not invest, this phenomenon happens, so I believe that all banks should be given facilities and this action will help the banking system.
This meeting was held on Tuesday, June 2, 1402, from 8:30 to 11:30, under the auspices of the Education Office of the Development and Foresight Research Center.
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