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Monetary Loosening Impacts Iran Bank Deposits

CBI data also show that more than 1.95 quadrillion rials ($46.42 billion) in time deposits were attracted by the banking system by Feb. 19.CBI data also show that more than 1.95 quadrillion rials ($46.42 billion) in time deposits were attracted by the banking system by Feb. 19.

 The Central Bank of Iran’s policy to cap bank interest rates at 15% effectively changed the composition of deposit contracts signed with financial institutions.
A review of data published by the bank on its website as part of its monthly analyses of the monetary and banking sector indicates a gradual and continuing trend based on which people are increasingly ditching short-term deposit contracts in favor of long-term deals.
CBI announced on Aug. 23, 2017, that as of Sept. 2, all banks and credit institutions are obligated to refrain from paying high interests on their deposits and cap the interests on one-year deposits at 15% while paying a maximum of 10% on short-term deposits.
According to CBI figures, by Oct. 22, time deposits rose in volume by more than 1.39 quadrillion rials ($33.09 billion) from the beginning of the year, but that was largely due to the more than 2.03 quadrillion rials ($48.33 billion) in long-term deposits because short-term deposits contracted notably. 
By the end of the eighth month to Nov. 21, short-term deposits registered an eight-month decline of 12.2% while long-term deposits increased by 45.1%.

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