The Central Bank of Iran has started printing 2-million-rial traveler' checks (‘Iran Cheque’) to help facilitate transactions, Ehsan Khandouzi, the economy minster said adding that decision was taken in response to the people's demand for easier access to cash.
The one million and 500,000 rial Iran checks have been in circulation for years.
"Iran is one of the advanced countries when it comes to online banking. The need for carrying physical cash is minimal in the country. However, in certain situations, people still require cash and the 2-million-rial traveler checks aims to address this need," Khandouzi, who also is a spokesman for the government's economic department, told reporters according to SHADA.
"The Money and Credit Council is finalizing the process and the results will be announced soon," Khandouzi said.
He also spoke about the upswing in interbank rates. The minister noted that several economic variables contribute to the increase in interbank rates, such as policies of the Central Bank of Iran to control inflation and monetary contraction, which have a significant impact on the rates.
Interbank rates continued to climb last week reaching the highest level in seven years. According to EcoIran Web TV, rates were up 0.1% during the week to April 5 reaching 23.46%.
Interbank rates have shot up in the past two months. The choppy rates two years ago were seen as a key leading to the collapse of the share market. Experts say low interest rates drive liquidity out of banks to the bourse and vice versa.
Market observers are of the opinion that the increase in rates, among other things, is indicative of the liquidity crunch in banks operating in the interbank market despite CBI efforts to tame the uptrend with expansionary policies.
Interbank rate is interest charged on short-term lending between banks. Banks borrow money from each other to ensure that they have enough liquidity for immediate needs, or lend money when they have excess.
Iran’s interbank market was established in July 2008 to improve oversight of bank liquidity, facilitate short-term lending among banks, help monetary discipline and underpin monetary policies.
Khandouzi said the CBI has prepared a comprehensive plan to address issues related to imbalances and mismanagement in the banking sector.
"The plan seeks to reduce interbank rates and improve management of monetary policies. The government has said it will increase the capital of banks and repay debt owed to the banking network," Khandouzi said.
The minister added that the budget for state-owned banks has increased by 350 trillion rials and negotiations are underway to allocate a further 500 trillion rials in the 2023-24 budget.
