Lawmakers have made a decision that would allow the Central Bank of Iran to resume printing and distributing 'Iran Checks', urging the bank to adhere to the limits set by the Money and Credit Council.
Iran Checks are financial instruments which the CBI is permitted to issue with the purpose of easing monetary affairs and preserving the public's interests and assets. Contrary to regular checks issued by commercial banks, Iran Checks (like hard cash) are more similar to IOUs.
To avoid a hike in money supply, the CBI shall be required to freeze the equivalent amount in rial. Following a clause passed in 1972, the Cash Reserve Council will be responsible for monitoring the procedure.
In 2007 all commercial banks were permitted to print Iran Checks; each bill was maximum 500 thousand rials which at the time was worth nearly $55 (with the depreciation of the rial it’s now about $18 at official exchange rate). During the following year the previous arrangement was abrogated and the CBI was monopolistically announced as the sole entity legally permitted to print and distribute the checks worth 500 thousand and 100 thousand rials ($36).
In 2012, following the investigations of a council responsible for aligning governments' approvals with the law, Parliament Speaker Ali Larijani announced that the CBI no longer had the right to print Iran Checks.
With the ratification of Note B of Clause 7 of the banking law on Tuesday, the parliament once again gave the go ahead to the CBI to issue the checks.
In another development, the lawmakers ruled that any use of loans in foreign exchange in the upcoming year may be done only if CBI's net overseas assets do not increase.
Additionally during the same session it was settled that in order to clear debts with institutional/non-institutional entities as well as cooperatives, the government will be allowed to issue Islamic bonds known as sukuk with a total value of 10 trillion rials ($362 million) in the next year.
The bonds are a form of financial instrument. They will be issued with the signature of the economy minister and will be tax free.
