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Impact of Fiat Money

Impact of Fiat MoneyImpact of Fiat Money

Expansion of monetary growth has again been blamed on the Central Bank of Iran’s obligation to purchase forex from the National Development Fund of Iran and settle the payment in rials, an “ill-advised method” the CBI governor says is tantamount to over borrowing  from the bank at a time when NDFI currency resources at best are inaccessible.
In a note on his social media account, Abdolnasser Hemmati wrote the CBI buying currency from the NDFI to fund budget deficits at the time of tough economic and banking sanctions is like “funding the budget via [expanding] monetary base”. 
“This method in the short-term is tantamount to borrowing from the central bank,” he wrote, adding that “the CBI communicated its (frank) opinion about the possible adverse impact of this method of budget financing”. 

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