On the 61st anniversary of foundation of Central Bank of Iran, its governor Akbar Komijani hailed the efforts to counter what he described as an “economic war”.
“In the past three and a half years, the Iranian economy was under the toughest economic sanctions in history and the CBI, as the main pillar of the financial structure, was at the center of the economic war,” he was quoted as saying by the CBI website.
The economic sanctions, however, failed to produce what its (American government) architects had desired, Komijani said, o acknowledging that the sanctions regime “had negative consequences for the economy, in particular on the inflation and forex reserves.”
Meeting the currency needs for importing basic goods, financial support to businesses hurt by the pandemic and securing funds for importing the Covid-19 vaccine have been the CBI’s key priorities, he noted.
Regarding achievements in the past three years, the senior banker pointed to measures in the monetary, supervisory, foreign exchange and IT sectors.
“Modernizing monetary policy and implementation of open market operations” in January 2020 that has since evolved were among progress list, he added.
The CBI has encouraged banks to engage in OMO as part of measures to control the monetary base. Using bonds as collateral to borrow from the CBI and regulating interbank interest rate are key elements of the OMO.
It says the monetary policy has helped in curbing the unbridled money supply.
Higher Lending
Striving to keep businesses open under the worsening pandemic climate and US restrictions, Komijani said that it has boosted lending to businesses and knowledge-based companies, particularly loans to boost working capital.
As per CBI data, banks injected more than 18,989.2 trillion rials ($78 billion) into the economy in the fiscal year ending in March -- up 9,239.3 trillion rials ($40b) or 94.8% compared to the year before.
As for measures to cope with the lost oil income due to the US economic blockade, he pointed to the special mechanisms for settling currency payments, namely barter trade with several countries and companies.
Setting up a regulated market for trading forex is another CBI measures to help restore discipline to the chaotic currency market that has seen more than its share of steep fluctuations in the past several years.
The regulated forex market is a spot market dealing in cash wholesale currency. Trade is conducted by authorized exchange bureaus and banks that operate as brokerages.
Late last year the CBI finalized a rare bank merger in which five banks and credit institutions affiliated to Iran’s military forces merged with the state-owned Bank Sepah.
The Cabinet on Sunday approved a proposal by the CBI to raise capital on the anniversary of its founding. Accordingly, CBI capital will rise from the present 63.39 trillion rials ($260 million) to 69.39 trillion rials, as per a press published by the cabinetoffice.ir.
To boost capital, the bank taps into its contingency reserves, a fund set up for contingencies, including depreciation in the value of securities, risks arising out of monetary/exchange rate policy operations and other unforeseen risks.
