Bonds can be used to subdue inflation in the years to come, thus giving a free hand in extending credits to commercial banks, said the CEO of Middle East Bank. Manufacturers are complaining about a credit crunch that has come to pass due to the recessionary environment in the economy, said Parviz Aghili at the fourth conference on monetary policy, banking and manufacturing challenges – hosted by Financial Tribune’s parent firm, Donya-e-Eghtesad newspaper. “Our concentration on the banking system is wrong,” said the lender’s CEO, “if we use debt securities in the financial system, the pressure on the banking system to finance manufacturing will fall and manufacturers can sort their cash flow problems.” Over $212 trillion dollars of debt and equity were circulating in the global financial markets in 2012, $57 trillion of which were equity instruments and the rest was debt, Aghili said. “Debt securities have already proved their mettle in the global arena,” said the CEO. Although time is needed to see results, creating debt securities will in due course reduce inflation by creating market efficiency.
