The Central Bank of Iran (CBI), also known as ''Bank Markazi'', officially the Central Bank of the Islamic Republic of Iran ( fa, بانک مرکزی جمهوری اسلامی ايران, Bank Markazi-ye Jomhuri-ye Eslāmi-ye Irān;
SWIFT Code
ISO 9362 is an international standard for Business Identifier Codes (BIC), a unique identifier for business institutions, approved by the International Organization for Standardization (ISO). BIC is also known as SWIFT-BIC, SWIFT ID, or SWIFT code, ...
: BMJIIRTH) is the
central bank
A central bank, reserve bank, or monetary authority is an institution that manages the currency and monetary policy of a country or monetary union,
and oversees their commercial banking system. In contrast to a commercial bank, a central ba ...
of
Iran
Iran, officially the Islamic Republic of Iran, and also called Persia, is a country located in Western Asia. It is bordered by Iraq and Turkey to the west, by Azerbaijan and Armenia to the northwest, by the Caspian Sea and Turkmeni ...
.
Established under the Iranian Banking and Monetary Act in 1960, it serves as the banker to the Iranian government and has the exclusive right of issuing banknote and coinage. CBI is tasked with maintaining the value of
Iranian rial
The rial ( fa, ریال ایران, riyâl-è Irân; sign: ﷼; abbreviation: Rl (singular) and Rls (plural) or IR in Latin; ISO code: IRR) is the official currency of Iran.
There is no official symbol for the currency but the Iranian standar ...
and supervision of banks and credit institutions. It acts as custodian of the
National Jewels, as well as foreign exchange and gold reserves of Iran.
It is also a founding member of the
Asian Clearing Union
The Asian Clearing Union (ACU) was established on December 9, 1974, at the initiative of the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP). The primary objective of ACU, at the time of its establishment, was to se ...
, controls gold and capital flows overseas, represents Iran in the
International Monetary Fund
The International Monetary Fund (IMF) is a major financial agency of the United Nations, and an international financial institution, headquartered in Washington, D.C., consisting of 190 countries. Its stated mission is "working to foster globa ...
(IMF) and internationally concludes payment agreements between Iran and other countries.
The website of the Islamic Republic of Iran was shut down on September 21, 2022 by the hacker group "
Anonymous" in the form of a
DDoS
In computing, a denial-of-service attack (DoS attack) is a cyber-attack in which the perpetrator seeks to make a machine or network resource unavailable to its intended users by temporarily or indefinitely disrupting services of a host
A ...
-Attack and is not accessible. The reason is a protest due to the death of
Mahsa Amin.
History
The first attempt at introducing
paper currency
A banknote—also called a bill (North American English), paper money, or simply a note—is a type of negotiable promissory note, made by a bank or other licensed authority, payable to the bearer on demand.
Banknotes were originally issued ...
in Iran occurred during the
Mongol
The Mongols ( mn, Монголчууд, , , ; ; russian: Монголы) are an East Asian ethnic group native to Mongolia, Inner Mongolia in China and the Buryatia Republic of the Russian Federation. The Mongols are the principal member of ...
Ilkhanate
The Ilkhanate, also spelled Il-khanate ( fa, ایل خانان, ''Ilxānān''), known to the Mongols as ''Hülegü Ulus'' (, ''Qulug-un Ulus''), was a khanate established from the southwestern sector of the Mongol Empire. The Ilkhanid realm, ...
of the 13th century CE. The innovation, developed in
Song Dynasty
The Song dynasty (; ; 960–1279) was an imperial dynasty of China that began in 960 and lasted until 1279. The dynasty was founded by Emperor Taizu of Song following his usurpation of the throne of the Later Zhou. The Song conquered the rest ...
China
China, officially the People's Republic of China (PRC), is a country in East Asia. It is the world's most populous country, with a population exceeding 1.4 billion, slightly ahead of India. China spans the equivalent of five time zones and ...
, did not take hold in Iran, and paper currency did not return to Iran in any significant manner for several centuries.
Modern era
![Imperial Bank of Persia](https://upload.wikimedia.org/wikipedia/commons/4/45/Imperial_Bank_of_Persia.jpg)
In 1889, the British-owned
Imperial Bank of Persia
The Imperial Bank of Persia ( fa, بانک شاهنشاهی ایران, Bank-e Šâhanšâhi-ye Irân) was a British bank that operated as the state bank and bank of issue in Iran (formerly known as Persia until 1935) between 1889 and 1929. It ...
(''Bānk-e Šāhī'') was founded and it was given the exclusive right to issue bank notes in Iran. In 1890 it introduced the first bank notes in Iran, ranging from 1 to 1,000
tomans.
The bank did not do much to strengthen the Iranian
capital formation
Capital formation is a concept used in macroeconomics, national accounts and financial economics. Occasionally it is also used in corporate accounts. It can be defined in three ways:
*It is a specific statistical concept, also known as net invest ...
or support then-currency of Iran,
qiran.
To compete with the British bank,
Imperial Russia
The Russian Empire was an empire and the final period of the List of Russian monarchs, Russian monarchy from 1721 to 1917, ruling across large parts of Eurasia. It succeeded the Tsardom of Russia following the Treaty of Nystad, which ended th ...
also opened the Russian Loan and Development Bank.
Polyakov's ''Bank Esteqrazi'' was bought in 1898 by the
Tzarist government of Russia, and later passed into the hands of the
Iranian government
The Government of the Islamic Republic of Iran ( fa, نظام جمهوری اسلامی ایران, Neẓām-e jomhūrī-e eslāmi-e Irān, known simply as ''Neẓām'' ( fa, نظام, lit=the system) among its supporters) is the ruling state a ...
by a contract in 1920.
The first state-owned Iranian bank,
Bank Melli Iran
Bank Melli Iran (BMI; fa, بانک ملی ایران, lit=National Bank of Iran, ''Bânk-e Melli-ye Irân'') is the first national and commercial retail bank of Iran. It is considered as the largest Iranian company in terms of annual income with ...
was established in 1927 by the government of Iran. On 30 May 1930, it took the responsibility to function as Iran's central bank, and took the rights of the Imperial Bank for
£200,000, while it acted as a commercial bank at the same time.
The bank's primary objective was to facilitate government's financial transactions and to print and distribute the Iranian currency (
rial Rial, riyal, or RIAL may refer to:
* Rial (surname), a surname (and list of people with the name)
* Royal Institution for the Advancement of Learning, McGill University
* Rial Racing, a former German Formula One team
Various currencies named rial ...
and
toman). For more than three decades, Bank Melli Iran acted as the central bank of Iran and was charged with the responsibility to maintain the value of
Iranian rial
The rial ( fa, ریال ایران, riyâl-è Irân; sign: ﷼; abbreviation: Rl (singular) and Rls (plural) or IR in Latin; ISO code: IRR) is the official currency of Iran.
There is no official symbol for the currency but the Iranian standar ...
. In 1955, the bank was given the responsibility to supervise the national banking system.
In August 1960, the Iranian government established the Central Bank of Iran (CBI) and separated all central banking responsibilities from Bank Melli Iran and assigned it to the newly-formed central bank.
Scope and responsibilities of the Central Bank of the Islamic Republic of Iran (CBI) have been defined in the Monetary and Banking Law of Iran (1960).
The Central Bank of Iran was renamed to "the Central Bank of the Islamic Republic of Iran", and Iran's banking system adhered to the new Islamic rules that prohibit earning or paying interest in 1983.
CBI maintains a museum of historic and ancient jewelry owned and used by the ex-kings of Persia. This museum houses the
Imperial Crown Jewels and is one of the most appealing tourist attractions in Iran.
Organization
Money and Credit Council
The Money and Credit Council (MCC) is the highest banking policy-making body of Bank Markazi. Its permanent members include the
CBI Governor, the
Finance and Economy Minister, two Ministers chosen by the
Cabinet
Cabinet or The Cabinet may refer to:
Furniture
* Cabinetry, a box-shaped piece of furniture with doors and/or drawers
* Display cabinet, a piece of furniture with one or more transparent glass sheets or transparent polycarbonate sheets
* Filing ...
, The Head of the
Chamber of Commerce
A chamber of commerce, or board of trade, is a form of business network. For example, a local organization of businesses whose goal is to further the interests of businesses. Business owners in towns and cities form these local societies to ad ...
, the
General Prosecutor
A general officer is an officer of high rank in the armies, and in some nations' air forces, space forces, and marines or naval infantry.
In some usages the term "general officer" refers to a rank above colonel."general, adj. and n.". OED O ...
and two lawmakers (
MPs).
Each year, after approval of the
government's annual budget, the CBI presents a detailed monetary and credit policy to the MCC for approval. Thereafter, major elements of these policies are incorporated in the
five-year economic development plan.
MCC meets every three months.
In practice, the ability of the banking system to create money is not much constrained by the amount of
scriptural money through
fractional reserve banking
Fractional-reserve banking is the system of banking operating in almost all countries worldwide, under which banks that take deposits from the public are required to hold a proportion of their deposit liabilities in liquid assets as a reserve, ...
. Indeed,
most banks first extend credit and
look for reserves later. The Iranian Central Bank needs more independence from the government in order to combat inflation, according to the country's
Parliament Research Center.
As of 2010, Iran's Central Bank, is not able to conduct a "proactive"
monetary policy
Monetary policy is the policy adopted by the monetary authority of a nation to control either the interest rate payable for very short-term borrowing (borrowing by banks from each other to meet their short-term needs) or the money supply, often a ...
(e.g. it needs Majlis' approval before issuing
participation bonds) and has no control over
the government's fiscal policy.
General Assembly
The current combination of the Central Bank's
board of directors
A board of directors (commonly referred simply as the board) is an executive committee that jointly supervises the activities of an organization, which can be either a for-profit or a nonprofit organization such as a business, nonprofit organiz ...
are the
President
President most commonly refers to:
*President (corporate title)
*President (education), a leader of a college or university
*President (government title)
President may also refer to:
Automobiles
* Nissan President, a 1966–2010 Japanese ful ...
, Economy and Commerce Ministers, Deputy-President for strategic planning, and a Minister selected by the Cabinet.
"Reform" proposal
Seven
economist
An economist is a professional and practitioner in the social sciences, social science discipline of economics.
The individual may also study, develop, and apply theories and concepts from economics and write about economic policy. Within this ...
s with at least 15 years of work experience were to become members of the general assembly according to a new law proposed by the Majlis in 2010, thus moving this body from being state-dominated to one where the private sector has greater say in
the decision making process. The tenure of each member would be for 10 years and only for one term.
Then
President Mahmoud Ahmadinejad criticized this proposal and said that it is important for the Central Bank of Iran not to fall under
private control "because it would not benefit the
Iranian people" over the long run.
Governors
The
President of Iran
The president of Iran ( fa, رئیسجمهور ایران, Rayis Jomhur-e Irān) is the head of government of the Islamic Republic of Iran. The president is the second highest-ranking official of Iran after the Supreme Leader.
The president i ...
proposes a person as the governor of CBI, who must be verified by the general assembly and appointed by a presidential decree.
Objectives and functions
The objectives of the Central Bank of the Islamic Republic of Iran as per its charter and according to section 10 of the Monetary and Banking Law of Iran (MBAI) are as follows:
* Maintaining the value of
national currency
Fiat money (from la, fiat, "let it be done") is a type of currency that is not backed by any commodity such as gold or silver. It is typically designated by the issuing government to be legal tender. Throughout history, fiat money was sometime ...
* Maintaining the equilibrium in the
balance of payments
In international economics, the balance of payments (also known as balance of international payments and abbreviated BOP or BoP) of a country is the difference between all money flowing into the country in a particular period of time (e.g., a ...
* Facilitating trade-related
financial transaction
A financial transaction is an agreement, or communication, between a buyer and seller to exchange goods, services, or assets for payment. Any transaction involves a change in the status of the finances of two or more businesses or individuals. A ...
s
* Improving the economic growth potential of the country
To achieve the objectives as stated in the MBAI, CBI is endowed with the responsibility of fulfilling the following functions:
* Issuance of notes and coins
* Supervision of banks and credit institutions
* Formulation and regulation of
foreign exchange
The foreign exchange market (Forex, FX, or currency market) is a global decentralized or over-the-counter (OTC) market for the trading of currencies. This market determines foreign exchange rates for every currency. It includes all as ...
policies and transactions
* Regulation on gold transactions
* Formulation and regulation on transactions and inflow/outflow of Domestic currency
Islamic banking
After the
Islamic Revolution
The Iranian Revolution ( fa, انقلاب ایران, Enqelâb-e Irân, ), also known as the Islamic Revolution ( fa, انقلاب اسلامی, Enqelâb-e Eslâmī), was a series of events that culminated in the overthrow of the Pahlavi dyna ...
, the Central Bank was mandated to establish an
Islamic banking
Islamic banking, Islamic finance ( ar, مصرفية إسلامية), or Sharia-compliant finance is banking or financing activity that complies with Sharia (Islamic law) and its practical application through the development of Islamic economic ...
law. In 1983 the Islamic Banking law of Iran was passed by ''
Majlis
( ar, المجلس, pl. ') is an Arabic term meaning "sitting room", used to describe various types of special gatherings among common interest groups of administrative, social or religious nature in countries with linguistic or cultural conne ...
''. This law describes and authorizes an Iranian
Shiite
Shīʿa Islam or Shīʿīsm is the second-largest branch of Islam. It holds that the Islamic prophet Muhammad designated ʿAlī ibn Abī Ṭālib as his successor (''khalīfa'') and the Imam (spiritual and political leader) after him, most ...
version of Islamic commercial laws (as differentiated from a less 'liberal'
Sunni version). According to this law,
Iranian banks can only engage in
interest
In finance and economics, interest is payment from a borrower or deposit-taking financial institution to a lender or depositor of an amount above repayment of the principal sum (that is, the amount borrowed), at a particular rate. It is distinct ...
-free Islamic transactions (as interest is considered
usury
Usury () is the practice of making unethical or immoral monetary loans that unfairly enrich the lender. The term may be used in a moral sense—condemning taking advantage of others' misfortunes—or in a legal sense, where an interest rate is ch ...
or "
riba
The Royal Institute of British Architects (RIBA) is a professional body for architects primarily in the United Kingdom, but also internationally, founded for the advancement of architecture under its royal charter granted in 1837, three suppl ...
" and is forbidden by
Islam
Islam (; ar, ۘالِإسلَام, , ) is an Abrahamic religions, Abrahamic Monotheism#Islam, monotheistic religion centred primarily around the Quran, a religious text considered by Muslims to be the direct word of God in Islam, God (or ...
and the holy book of
Qur’an
The Quran (, ; Standard Arabic: , Quranic Arabic: , , 'the recitation'), also romanized Qur'an or Koran, is the central religious text of Islam, believed by Muslims to be a revelation from God. It is organized in 114 chapters (pl.: , sing.: ...
). These are commercial transactions that involve exchange of goods and services in return for a share of the "provisional profit" called ''Mobadala''.
In practice, Iran uses what are officially termed "provisional" interest rates, as rates paid to depositors or received from borrowers should reflect the profits or losses of a business. Under these rules, deposit rates, known as "dividends", are in theory related to a bank's profitability. In reality, however, these dividends have become fixed rates of return—depositors have never lost their savings because of losses made by the banks and almost never received returns larger than the provisional ex-ante profit rates. Interest charged on loans is presented as "fees" or a share of corporate profits.
[Iran Financial Services Forecast, Economist Intelligence Unit, August 18, 2008] All such transactions are performed through (12) Islamic contracts, such as ''Mozarebe'', ''Foroush Aghsati'', ''Joalah'', ''Salaf'', and ''Gharzolhasaneh''. Details of these contracts and related practices are outlined in the ''Iranian Interest-Free banking law'' and its guidelines. Examples are:
#
Gharzolhasaneh: An interest-free, non-profit, loan extended by a bank to a real or legal person for a definite period of time.
# Joalah: The undertaking by one party (the jael, Bank or employer) to pay a specified money (the joal) to another party in return for rendering a specified service in accordance with the terms of the contract. The party rendering the service shall be called "Amel" (the Agent or Contractor).
# Mosaqat: A contract between the owner of an orchard or garden with another party (the Amel or Agent) for the purpose of gathering the harvest of the orchard or garden and dividing it, in a specified ratio, between the two parties . The harvest can be fruit, leaves, flowers, etc. of the plants in the orchard or garden .
# Mozaraah: A contract where the bank (the Mozare) turns over a specified plot of land for a specified period of time to another party (the Amel or Agent) for the purpose of farming the land and dividing the harvest between the two parties at a specified ratio.
# Mozarebe: A contract wherein the bank undertakes to provide the cash capital and other party (the Amel or Avent) undertakes to use the capital for commercial purposes and divide the profit at a specified ratio between the two parties at the end of the term of the contract.
Sharia
Sharia (; ar, شريعة, sharīʿa ) is a body of religious law that forms a part of the Islamic tradition. It is derived from the religious precepts of Islam and is based on the sacred scriptures of Islam, particularly the Quran and the H ...
-compliant assets has reached about $400 billion throughout the world, according to
Standard & Poor
S&P Global Ratings (previously Standard & Poor's and informally known as S&P) is an American credit rating agency (CRA) and a division of S&P Global that publishes financial research and analysis on stocks, bonds, and commodities. S&P is consi ...
’s Ratings Services, and the potential market is $4 trillion.
Iran,
Saudi Arabia
Saudi Arabia, officially the Kingdom of Saudi Arabia (KSA), is a country in Western Asia. It covers the bulk of the Arabian Peninsula, and has a land area of about , making it the fifth-largest country in Asia, the second-largest in the A ...
and
Malaysia
Malaysia ( ; ) is a country in Southeast Asia. The federation, federal constitutional monarchy consists of States and federal territories of Malaysia, thirteen states and three federal territories, separated by the South China Sea into two r ...
are at the top with the biggest sharia-compliant assets.
According to the
IMF,
Islamic banking
Islamic banking, Islamic finance ( ar, مصرفية إسلامية), or Sharia-compliant finance is banking or financing activity that complies with Sharia (Islamic law) and its practical application through the development of Islamic economic ...
forbids pure monetary
speculation
In finance, speculation is the purchase of an asset (a commodity, good (economics), goods, or real estate) with the hope that it will become more valuable shortly. (It can also refer to short sales in which the speculator hopes for a decline i ...
and stresses that deals should be based on real
economic activity
Economics () is the social science that studies the Production (economics), production, distribution (economics), distribution, and Consumption (economics), consumption of goods and services.
Economics focuses on the behaviour and intera ...
and therefore poses less
risk
In simple terms, risk is the possibility of something bad happening. Risk involves uncertainty about the effects/implications of an activity with respect to something that humans value (such as health, well-being, wealth, property or the environme ...
than conventional banking to the stability of financial systems.
Criticism
Critics believe that the Iranian Interest-Free banking law has simply created the context for legitimizing
usury
Usury () is the practice of making unethical or immoral monetary loans that unfairly enrich the lender. The term may be used in a moral sense—condemning taking advantage of others' misfortunes—or in a legal sense, where an interest rate is ch ...
or
riba
The Royal Institute of British Architects (RIBA) is a professional body for architects primarily in the United Kingdom, but also internationally, founded for the advancement of architecture under its royal charter granted in 1837, three suppl ...
. In reality all banks are charging their borrowers a fixed pre-set amount at a rate of interest that is approved by the Central Bank at least once a year. No goods or services are exchanged as part of these contracts and banks rarely assume any
commercial risk. High value
collateral
Collateral may refer to:
Business and finance
* Collateral (finance), a borrower's pledge of specific property to a lender, to secure repayment of a loan
* Marketing collateral, in marketing and sales
Arts, entertainment, and media
* ''Collate ...
items such as
real estate
Real estate is property consisting of land and the buildings on it, along with its natural resources such as crops, minerals or water; immovable property of this nature; an interest vested in this (also) an item of real property, (more general ...
,
commercial paper
Commercial paper, in the global financial market, is an unsecured promissory note with a fixed maturity of rarely more than 270 days. In layperson terms, it is like an " IOU" but can be bought and sold because its buyers and sellers have some ...
, bank guarantees and machinery eliminate any risk of loss. In case of defaults or bankruptcies, the principal amount, the expected interest and the late fees are collected through possession and or sale of secured collaterals.
Payment systems
In 2005, the government obliged the Central Bank of Iran and the
Iranian banks, mostly state owned, to set up all the necessary infrastructures (regulatory, hardware, software) for fully launching
e-money in Iran by March 2005. While this plan has not yet fully materialized, local
debit card
A debit card, also known as a check card or bank card is a payment card that can be used in place of cash to make purchases. The term '' plastic card'' includes the above and as an identity document. These are similar to a credit card, but u ...
s are now commonplace and have removed the main obstacle to the growth of
e-commerce
E-commerce (electronic commerce) is the activity of electronically buying or selling of products on online services or over the Internet. E-commerce draws on technologies such as mobile commerce, electronic funds transfer, supply chain manageme ...
(in the national scale) as well as the full roll out of
e-government initiatives. However, Iran remains largely a cash-based economy.
The Central Bank has developed the Real Time Gross Settlement System (SATNA) as the main center for settlement of Iranian banks' transactions in rial. Upon implementation of the first and second phases of this system in 2006/07, real time settlement through the
interbank
Interbank is a Peruvian provider of financial services.
History
In 1897, Elias Mujica opened an agency at Jiron de la Union in Lima's historical center under the name of ''Banco Internacional''. In 1934, branches were opened in Chiclayo and ...
information transfer network (
Shetab Banking System Shetab (), officially the Interbank Information Transfer Network (), is an electronic banking clearance and automated payments system used in Iran. The system was introduced in 2002 with the intention of creating a uniform backbone for the Iranian ...
) and interbank
clearing house
Clearing house or Clearinghouse may refer to:
Banking and finance
* Clearing house (finance)
* Automated clearing house
* ACH Network, an electronic network for financial transactions in the U.S.
* Bankers' clearing house
* Cheque clearing
* Cl ...
was started in the review year. Since 2007/08, bank-to-bank and customer-to-customer payments were also settled through SATNA. The Retail Funds Transfer System (SAHAB), launched at end-2006/07 for real time transfer of a large volume of payments of relatively small value, was further developed in 2007/08. Moreover, there are further plans to connect Iran's Shetab to information transfer networks of other countries.
In 2011, two new payment systems were launched: Scripless Securities Settlement System (TABA) as the electronic infrastructure for placement and settlement of various securities, including governmental and CBI
participation papers. The launching of the automated clearing house system (PAYA) for processing individual and multiple payment orders, connection of Iran's Interbank Information Transfer Network (Shetab) to other
ATM and
POS switch systems for the acceptance of international bank cards, designing of the electronic card payment system (SHAPARAK) for the centralization and reorganization of
POSs.
Digital currency
According to
the Ministry of ICT in 2018,
Post Bank of Iran
Post Bank of Iran ( fa, پست بانک ایران, ''Pest Bank Iran'') is an Iranian bank.
History
Post Bank of Iran was formally established in 2006. It is the eleventh state owned bank in Iran.
International issues
On 6 September 2013, the E ...
will issue Iran's first
digital currency
Digital currency (digital money, electronic money or electronic currency) is any currency, money, or money-like asset that is primarily managed, stored or exchanged on digital computer systems, especially over the internet. Types of digital cu ...
over the
blockchain
A blockchain is a type of distributed ledger technology (DLT) that consists of growing lists of records, called ''blocks'', that are securely linked together using cryptography. Each block contains a cryptographic hash of the previous block, a ...
technology (with the advantage, in relation to the
sanctions against Iran
There have been a number of sanctions against Iran imposed by a number of countries, especially the United States, and international entities. Iran was the most sanctioned country in the world until it was surpassed by Russia following its inva ...
that blockchain transactions do not need any
clearing bank).
Furthermore, given
Iran's large reserves of oil and
gas
Gas is one of the four fundamental states of matter (the others being solid, liquid, and plasma).
A pure gas may be made up of individual atoms (e.g. a noble gas like neon), elemental molecules made from one type of atom (e.g. oxygen), or ...
, the
Iranian rial
The rial ( fa, ریال ایران, riyâl-è Irân; sign: ﷼; abbreviation: Rl (singular) and Rls (plural) or IR in Latin; ISO code: IRR) is the official currency of Iran.
There is no official symbol for the currency but the Iranian standar ...
could become a
reserve currency
A reserve currency (or anchor currency) is a foreign currency that is held in significant quantities by central banks or other monetary authorities as part of their foreign exchange reserves. The reserve currency can be used in international tran ...
if
parity is established with
oil and gas
A fossil fuel is a hydrocarbon-containing material formed naturally in the Earth's crust from the remains of dead plants and animals that is extracted and burned as a fuel. The main fossil fuels are coal, oil, and natural gas. Fossil fuels ...
, as was between
USD
The United States dollar (symbol: $; code: USD; also abbreviated US$ or U.S. Dollar, to distinguish it from other dollar-denominated currencies; referred to as the dollar, U.S. dollar, American dollar, or colloquially buck) is the official ...
and
gold in the past (e.g. parity of 1,000,000
tomans for a
barrel
A barrel or cask is a hollow cylindrical container with a bulging center, longer than it is wide. They are traditionally made of wooden staves and bound by wooden or metal hoops. The word vat is often used for large containers for liquids, ...
of oil), such as with
Venezuela
Venezuela (; ), officially the Bolivarian Republic of Venezuela ( es, link=no, República Bolivariana de Venezuela), is a country on the northern coast of South America, consisting of a continental landmass and many islands and islets in th ...
's newly
minted
Minted is an online marketplace of premium design goods created by independent artists and designers. The company sources art and design from a community of more than 16,000 independent artists from around the world. Minted offers artists two bus ...
"
Petro"
crypto-currency
A cryptocurrency, crypto-currency, or crypto is a digital currency designed to work as a medium of exchange through a computer network that is not reliant on any central authority, such as a government or bank, to uphold or maintain it. It i ...
.
Fintech
Finnotech.ir is Iran's premier
banking API provider and Informatics Services Corporation (ISC) is a leading operator of information systems for the banking industry (including
Shetab). As of 2016, Iran had 50 companies active in
fintech
Fintech, a portmanteau of "financial technology", refers to firms using new technology to compete with traditional financial methods in the delivery of financial services. Artificial intelligence, blockchain, cloud computing, and big data are r ...
. The CBI limits
fintech
Fintech, a portmanteau of "financial technology", refers to firms using new technology to compete with traditional financial methods in the delivery of financial services. Artificial intelligence, blockchain, cloud computing, and big data are r ...
s' role in Iran's financial sector by allowing them to operate as long as they are not involved in money creation, currency exchange, offering payment tools (like cards) and attracting deposits.
Cheques
As of January 21, 2010, account holders will no longer be allowed to withdraw more than $15,000 from Iranian banks but they can still write checks for larger amounts. The government wants people to use
bank check
A cashier's check (or cashier's cheque, cashier's order) is a check guaranteed by a bank, drawn on the bank's own funds and signed by a cashier. Cashier's checks are treated as guaranteed funds because the bank, rather than the purchaser, is respo ...
s and
electronic banking systems instead of cash transactions.
In 2009, 10.7% of
cheques bounced.
Debit/credit cards
In 2007, Tetra-Tech IT Company announced that
Visa
Visa most commonly refers to:
*Visa Inc., a US multinational financial and payment cards company
** Visa Debit card issued by the above company
** Visa Electron, a debit card
** Visa Plus, an interbank network
*Travel visa, a document that allows ...
and
MasterCard could be used for online sales and in Iranian e-card terminals at shopping malls, hotels, restaurants, and travel agencies for
Iranians and foreign tourists.
Iran's electronic commerce will reach 10 trillion rials ($1 billion) by March 2009.
Some wealthier people have
debit cards
A debit card, also known as a check card or bank card is a payment card that can be used in place of cash to make purchases. The term ''plastic card'' includes the above and as an identity document. These are similar to a credit card, but unl ...
, but MasterCard or Visa are no longer available in Iran, and few foreign banks are active there because of
international sanctions
International sanctions are political and economic decisions that are part of diplomatic efforts by countries, multilateral or regional organizations against states or organizations either to protect national security interests, or to protect in ...
. Around 94% of Iranians had a
debit card
A debit card, also known as a check card or bank card is a payment card that can be used in place of cash to make purchases. The term '' plastic card'' includes the above and as an identity document. These are similar to a credit card, but u ...
, compared with less than 20% in Egypt (2015).
In 2016, Iran introduced its own domestic credit card system based on
Sukuk principles and reported talks with
MasterCard (and other international payment operators) for a re-entry.
Hawala
Many Iranian businesses and individuals also rely on hawala, an informal trust-based money transfer system that exists in the Middle East and other Muslim countries. Since the imposition of recent
U.S. and UN financial sanctions on Iran, the use of hawala by Iranians has reportedly increased.
Anti-money laundering law
The Central Bank of Iran is enforcing the Anti-Money Laundering law to curb possible crime. The
minister of intelligence, the governor of the Central Bank of Iran (CBI) and several other ministers are among the members of the special committee in charge of the campaign against
money laundering
Money laundering is the process of concealing the origin of money, obtained from illicit activities such as drug trafficking, corruption, embezzlement or gambling, by converting it into a legitimate source. It is a crime in many jurisdictions ...
. In 2008, the Paris-based
Financial Action Task Force
The Financial Action Task Force (on Money Laundering) (FATF), also known by its French name, ''Groupe d'action financière'' (GAFI), is an intergovernmental organisation founded in 1989 on the initiative of the G7 to develop policies to combat m ...
(FATF) Watchdog praised the Islamic Republic's crackdown on money laundering. The 34-member financial watchdog congratulated Tehran on its commitment to seal money laundering loopholes. However, in 2010, FATF, named Ecuador and Iran on a list of states that it says are failing to comply with international regulations against money laundering and financing terrorism. Despite president
Hassan Rouhani
Hassan Rouhani ( fa, حسن روحانی, Standard Persian pronunciation: ; born Hassan Fereydoun ( fa, حسن فریدون, links=no); 12 November 1948) is an Iranian politician who served as the seventh president of Iran from 2013 to 2021. ...
showing interest in FATF, there has been a massive disagreements by hardliners related to supreme leader,
Ali Khamenei
Sayyid Ali Hosseini Khamenei ( fa, سید علی حسینی خامنهای, ; born 19 April 1939) is a Twelver Shia ''marja and the second and current Supreme Leader of Iran, in office since 1989. He was previously the third president o ...
. Among them
Ahmad Jannati
Ahmad Jannati ( fa, احمد جنتی, born 23 February 1927) is an Iranian conservative politician. He was born in Ladan, Isfahan. Jannati is known for his anti-LGBT rhetoric and opposition to secularism. He is also a founding member of the Ha ...
, the chairman of the Assembly of Experts and the secretary of the Guardian Council and
Ali Akbar Velayati
Ali Akbar Velayati ( fa, علیاکبر ولایتی ; born 24 June 1945, Tehran) is an Iranian conservative politician and physician. He is currently member of the Expediency Discernment Council. Velayati is a distinguished professor at Shahi ...
, Iran's former foreign secretary and Supreme leader top foreign relationship advisor are two notable people who are against the FATF.
These disagreements and lack of FATF being approved by the Iranian parliament has brought FATF enforcement to halt.
It has been estimated by the
government of Iran
The Government of the Islamic Republic of Iran ( fa, نظام جمهوری اسلامی ایران, Neẓām-e jomhūrī-e eslāmi-e Irān, known simply as ''Neẓām'' ( fa, نظام, lit=the system) among its supporters) is the ruling state a ...
in 2015 that dirty money from
drug trafficking in Iran amounts to 10 trillion tomans a year (1 toman equals 10 rials), some of which has been finding its way into "elections and the securing of votes" to influence the
country's politics.
Reserves
Foreign reserves
*
Reserves of foreign exchange and gold: $125.9 billion (2015), $111.6 billion (2014), $68.06 billion (2013),
[ $74.06 billion (2012),][ $110 billion (2011),][Minister: Iran Facing No Problem in Currency Reserves, Revenues]
Fars News Agency, April 18, 2012. Retrieved May 2, 2012. $80 billion (2010), $40 billion (2005) (''note:'' most of Iran's forex reserves are frozen abroad (2014))
* Composition: In 2007, 10% of the reserves were held in gold
Gold is a chemical element with the symbol Au (from la, aurum) and atomic number 79. This makes it one of the higher atomic number elements that occur naturally. It is a bright, slightly orange-yellow, dense, soft, malleable, and ductile met ...
, 20% in US dollar
Dollar is the name of more than 20 currencies. They include the Australian dollar, Brunei dollar, Canadian dollar, Hong Kong dollar, Jamaican dollar, Liberian dollar, Namibian dollar, New Taiwan dollar, New Zealand dollar, Singapore dollar, U ...
s (down from 40% in 2006), the rest mostly in Euro
The euro ( symbol: €; code: EUR) is the official currency of 19 out of the member states of the European Union (EU). This group of states is known as the eurozone or, officially, the euro area, and includes about 340 million citizens . ...
and other major currencies (i.e., Japanese yen
The is the official currency of Japan. It is the third-most traded currency in the foreign exchange market, after the United States dollar (US$) and the euro. It is also widely used as a third reserve currency after the US dollar and the ...
, British pound
Sterling (abbreviation: stg; Other spelling styles, such as STG and Stg, are also seen. ISO code: GBP) is the currency of the United Kingdom and nine of its associated territories. The pound ( sign: £) is the main unit of sterling, and t ...
and the Swiss sranc). In 2009, Iran's President Mahmoud Ahmadinejad
Mahmoud Ahmadinejad ( fa, محمود احمدینژاد, Mahmūd Ahmadīnežād ), born Mahmoud Sabbaghian ( fa, محمود صباغیان, Mahmoud Sabbāghyān, 28 October 1956), ordered the replacement of the US dollar by the euro in the country's foreign exchange accounts because "it would help decouple Iran from the US banking system."
Gold reserves
In October 2010, Iran's gold reserves hit "record high" as the Central Bank took " preventive measures" to avoid a possible asset freeze by Western countries. In 2009, when the gold price
Of all the precious metals, gold is the most popular as an investment. Investors generally buy gold as a way of diversifying risk, especially through the use of futures contracts and Derivative (finance), derivatives. The gold market is subj ...
was on average $656 per ounce, a "few hundred tons" of gold were imported, IRNA
The Islamic Republic News Agency ( fa, خبرگزاری جمهوری اسلامی, ''Xebergâzari-ye Jimhuri-ye Eslâmi-ye''), or IRNA, is the official news agency of the Islamic Republic of Iran. Founded on 13 November 1934 as Pars News Agency ...
quoted CBI Governor Mahmoud Bahmani
Mahmoud Bahmani (born 2 January 1947, in Savojbolagh) is an Iranian politician and banker. He was the Governor of the Central Bank of Iran, appointed on 2 September 2008. His term as the Governor was ended on 2 September 2013 and he was succeed ...
. "At present, the price of each ounce of gold is $1,230. Consequently, the value of the national reserves has risen by a few billion dollars" he said. Iran has changed 15% of its foreign exchange reserves into gold as the number is 1.7% for countries such as India
India, officially the Republic of India (Hindi: ), is a country in South Asia. It is the seventh-largest country by area, the second-most populous country, and the most populous democracy in the world. Bounded by the Indian Ocean on the so ...
and China
China, officially the People's Republic of China (PRC), is a country in East Asia. It is the world's most populous country, with a population exceeding 1.4 billion, slightly ahead of India. China spans the equivalent of five time zones and ...
(see also: U.S. sanctions against Iran
The United States has since 1979 applied various economic, trade, scientific and military sanctions against Iran. United States economic sanctions are administered by the Office of Foreign Assets Control (OFAC), an agency of the United States De ...
.)
In January 2012, the head of Tehran
Tehran (; fa, تهران ) is the largest city in Tehran Province and the capital of Iran. With a population of around 9 million in the city and around 16 million in the larger metropolitan area of Greater Tehran, Tehran is the most popul ...
's Chamber of Commerce reported that Iran had 907 tons of gold, purchased at an average of $600 per ounce and worth $54 billion at the current price. The CBI governor however reports only 500 tons (i.e. above ground gold reserves). The discrepancy is unexplained but the 907 tons could (mistakenly) include ''below-ground'' gold reserves (320 metric tons as of 2012) and possibly the gold in Iranian private hands (~100 tons in coins
A coin is a small, flat (usually depending on the country or value), round piece of metal or plastic used primarily as a medium of exchange or legal tender. They are standardized in weight, and produced in large quantities at a mint in order to ...
or bullion
Bullion is non-ferrous metal that has been refined to a high standard of elemental purity. The term is ordinarily applied to bulk metal used in the production of coins and especially to precious metals such as gold and silver. It comes from t ...
). In 2014, reports from the Central Bank put its gold stores at 90 tons only, the rest possibly used in barter trade
In trade, barter (derived from ''baretor'') is a system of exchange in which participants in a transaction directly exchange goods or services for other goods or services without using a medium of exchange, such as money. Economists distingu ...
following sanctions.[
]
Inflation and monetary policy
Double digit inflation rates have been a fact of life in Iran for the past 20 years. Between 2002 and 2006, the rate of inflation in Iran has been fluctuating between 12 and 16%.
Monetary policy in Iran has not been successful in meeting the inflation
In economics, inflation is an increase in the general price level of goods and services in an economy. When the general price level rises, each unit of currency buys fewer goods and services; consequently, inflation corresponds to a reductio ...
and monetary targets set in the Iranian Five-Year Development Plans, owing mainly to the monetary impact of government spending out of oil revenue. Although the attainment of the inflation targets has improved somewhat recently, the objective of a gradual disinflation to single-digit levels has not been achieved. Moreover, the implicit intermediate target of monetary policy, money growth, has
been systematically missed.
The Central Bank is an extension of the Iranian government and as such it does not operate independently. Interest rate
An interest rate is the amount of interest due per period, as a proportion of the amount lent, deposited, or borrowed (called the principal sum). The total interest on an amount lent or borrowed depends on the principal sum, the interest rate, th ...
is usually set based on political priorities and not monetary targets. There is little alignment between fiscal
Fiscal usually refers to government finance. In this context, it may refer to:
Economics
* Fiscal policy, use of government expenditure to influence economic development
* Fiscal policy debate
* Fiscal adjustment, a reduction in the government ...
and monetary policy
Monetary policy is the policy adopted by the monetary authority of a nation to control either the interest rate payable for very short-term borrowing (borrowing by banks from each other to meet their short-term needs) or the money supply, often a ...
.
The Central Bank assesses the inflation rate with the use of the prices of 395 goods and services in Iran's urban areas.
High levels of inflation have also been associated with a growth in Iran's money supply
In macroeconomics, the money supply (or money stock) refers to the total volume of currency held by the public at a particular point in time. There are several ways to define "money", but standard measures usually include Circulation (curren ...
. The Central Bank's data suggest that the money supply
In macroeconomics, the money supply (or money stock) refers to the total volume of currency held by the public at a particular point in time. There are several ways to define "money", but standard measures usually include Circulation (curren ...
growth has been about 40% annually. The rapid growth of money supply came from high demands for borrowing capital at the rate of 12% the banks offer, imposed by the Government to make credit
Credit (from Latin verb ''credit'', meaning "one believes") is the trust which allows one party to provide money or resources to another party wherein the second party does not reimburse the first party immediately (thereby generating a debt), ...
accessible to average Iranians and small entrepreneurs. However, ''this rate is lower than the rate of inflation''. This makes the cost of borrowing less than free market cost as determined by supply and demand
In microeconomics, supply and demand is an economic model of price determination in a Market (economics), market. It postulates that, Ceteris paribus, holding all else equal, in a perfect competition, competitive market, the unit price for a ...
, based on the inflation rate and investment risk
Financial risk is any of various types of risk associated with financing, including financial transactions that include company loans in risk of default. Often it is understood to include only downside risk, meaning the potential for financial ...
.
Direct instruments
* Banking profit rates – As of 2010, the interest rate charged between banks (i.e. interbank rate) is set by the government of Iran
The Government of the Islamic Republic of Iran ( fa, نظام جمهوری اسلامی ایران, Neẓām-e jomhūrī-e eslāmi-e Irān, known simply as ''Neẓām'' ( fa, نظام, lit=the system) among its supporters) is the ruling state a ...
.
* Credit ceiling – the CBI can intervene in and supervise monetary and banking affairs through limiting banks, specifying the mechanisms for use of funds and determining the ceiling of loans and credits in each sector.
Indirect instruments
* Reserve requirement ratio
Reserve requirements are central bank regulations that set the minimum amount that a commercial bank must hold in liquid assets. This minimum amount, commonly referred to as the commercial bank's reserve, is generally determined by the centra ...
– According to Article 14 of the Monetary and Banking Law of Iran, the CBI is authorized to determine reserve requirement ratio within 10 to 30 percent depending on banks’ liabilities’ composition and field of activity.
* CBI Participation Papers – The Central Bank must obtain approval from the Majlis
( ar, المجلس, pl. ') is an Arabic term meaning "sitting room", used to describe various types of special gatherings among common interest groups of administrative, social or religious nature in countries with linguistic or cultural conne ...
in order to issue participation papers.
* Open deposit account (ODA): control liquidity through absorption of banks’ excess resources. The CBI pays "profit
Profit may refer to:
Business and law
* Profit (accounting), the difference between the purchase price and the costs of bringing to market
* Profit (economics), normal profit and economic profit
* Profit (real property), a nonpossessory intere ...
" to these deposits with the CBI on the basis of specific rules.
Money supply
The International Monetary Fund
The International Monetary Fund (IMF) is a major financial agency of the United Nations, and an international financial institution, headquartered in Washington, D.C., consisting of 190 countries. Its stated mission is "working to foster globa ...
reports that in 2001, currency
A currency, "in circulation", from la, currens, -entis, literally meaning "running" or "traversing" is a standardization of money in any form, in use or circulation as a medium of exchange, for example banknotes and coins.
A more general def ...
and demand deposit
Demand deposits or checkbook money are funds held in demand accounts in commercial banks. These account balances are usually considered money and form the greater part of the narrowly defined money supply of a country. Simply put, these are depo ...
s—an aggregate commonly known as M1—were equal to $71.7 billion. In that same year, M2—an aggregate equal to M1 plus savings deposits
A savings account is a bank account at a retail bank. Common features include a limited number of withdrawals, a lack of cheque and linked debit card facilities, limited transfer options and the inability to be overdrawn. Traditionally, transac ...
, small time deposits, and money market
The money market is a component of the economy that provides short-term funds. The money market deals in short-term loans, generally for a period of a year or less.
As short-term securities became a commodity, the money market became a compon ...
mutual fund
A mutual fund is a professionally managed investment fund that pools money from many investors to purchase securities. The term is typically used in the United States, Canada, and India, while similar structures across the globe include the SICAV i ...
s—was $153.6 billion. According to the CBI, the country's liquidity amounted to some $174 billion by April 2008, $197 billion by October 2009. and over $300 billion in 2011. Estimates put the amount of capital floating in Iran's market at $254 billion in 2012.
Money in circulation reached $700 billion in March 2020 (based on the 2017 pre-devalation exchange rate). (Iran’s monetary base
In economics, the monetary base (also base money, money base, high-powered money, reserve money, outside money, central bank money or, in the UK, narrow money) in a country is the total amount of money created by the central bank. This include ...
reached 3,721.46 trillion rial Rial, riyal, or RIAL may refer to:
* Rial (surname), a surname (and list of people with the name)
* Royal Institution for the Advancement of Learning, McGill University
* Rial Racing, a former German Formula One team
Various currencies named rial ...
s (nearly $12 billion) in September 2020 while M2 reached $95 billion (i.e. 26% and 36.2% increase in one year respectively), while the money multiplier effect (which shows how much the monetary base could create new money in the economy) had reached an all-time high), thus explaining the rise in inflation
In economics, inflation is an increase in the general price level of goods and services in an economy. When the general price level rises, each unit of currency buys fewer goods and services; consequently, inflation corresponds to a reductio ...
(40%) and of the fall of the Iranian rial
The rial ( fa, ریال ایران, riyâl-è Irân; sign: ﷼; abbreviation: Rl (singular) and Rls (plural) or IR in Latin; ISO code: IRR) is the official currency of Iran.
There is no official symbol for the currency but the Iranian standar ...
in recent years. The Iranian rial has fallen almost five-fold since the beginning of 2018. In turn, Iran's forex reserves have fallen, as Iran is trying to maintain the value of its currency by injecting forex
The foreign exchange market (Forex, FX, or currency market) is a global decentralized or over-the-counter (OTC) market for the trading of currencies. This market determines foreign exchange rates for every currency. It includes all as ...
into the market to meet the demand for US dollar
The United States dollar (symbol: $; code: USD; also abbreviated US$ or U.S. Dollar, to distinguish it from other dollar-denominated currencies; referred to as the dollar, U.S. dollar, American dollar, or colloquially buck) is the official ...
s by the general public and companies and pay for imports.
In turn, the cause of this is due to inefficient taxation in Iran
Taxation in Iran is levied and collected by the Iranian National Tax Administration under the Ministry of Finance and Economic Affairs of the Government of Iran. In 2008, about 55% of the government's budget came from oil and natural gas reven ...
and tax collection (and tax evasion
Tax evasion is an illegal attempt to defeat the imposition of taxes by individuals, corporations, trusts, and others. Tax evasion often entails the deliberate misrepresentation of the taxpayer's affairs to the tax authorities to reduce the taxp ...
in particular). Inflation
In economics, inflation is an increase in the general price level of goods and services in an economy. When the general price level rises, each unit of currency buys fewer goods and services; consequently, inflation corresponds to a reductio ...
(or loss of purchasing power
Purchasing power is the amount of goods and services that can be purchased with a unit of currency. For example, if one had taken one unit of currency to a store in the 1950s, it would have been possible to buy a greater number of items than would ...
) being a uniform hidden taxation on the population (unless compensated by an increase in salaries and productivity) which adversely affects the lower strata of the Iranian population the most.
Balance sheet
:::::::::::::::Note: 1/ Includes some liabilities in foreign currency to residents.
Government and private sector debt
As of December 2019, the government debt to banks reached 3,880,000 billion rials (approx. $30 billion, which is a 3.5% rise since 2013 when President Rouhani
Hassan Rouhani ( fa, حسن روحانی, Standard Persian pronunciation: ; born Hassan Fereydoun ( fa, حسن فریدون, links=no); 12 November 1948) is an Iranian peoples, Iranian politician who served as the seventh president of Iran fr ...
took office). This means that the government prints money, which is made available to banks the state controls in Iran and then it borrows from these banks at interest
In finance and economics, interest is payment from a borrower or deposit-taking financial institution to a lender or depositor of an amount above repayment of the principal sum (that is, the amount borrowed), at a particular rate. It is distinct ...
. The private sector's debt to banks in the twelve-month period ending on December 20, 2019 reached 14,400,000 billion rials or more than $110 billion.
Foreign relations
Iran is member of the Islamic Development Bank
The Islamic Development Bank ( ar, البنك الإسلامي للتنمية, abbreviated as IsDB) is a multilateral development finance institution that is focused on Islamic finance for infrastructure development and located in Jeddah, Saudi A ...
. As of August 2006, the World Bank
The World Bank is an international financial institution that provides loans and grants to the governments of low- and middle-income countries for the purpose of pursuing capital projects. The World Bank is the collective name for the Interna ...
has financed 48 development projects in the country for a total original commitment of US$3,413 million. World Bank loans to Iran come only from the International Bank for Reconstruction and Development
The International Bank for Reconstruction and Development (IBRD) is an international financial institution, established in 1944 and headquartered in Washington, D.C., United States, that is the lending arm of World Bank Group. The IBRD offers l ...
(IBRD). Iran is a member of the World Bank's Multilateral Investment Guarantee Agency
The Multilateral Investment Guarantee Agency (MIGA) is an international financial institution which offers political risk insurance and credit enhancement guarantees. These guarantees help investors protect foreign direct investments against ...
. Iran joined the International Monetary Fund
The International Monetary Fund (IMF) is a major financial agency of the United Nations, and an international financial institution, headquartered in Washington, D.C., consisting of 190 countries. Its stated mission is "working to foster globa ...
(IMF) on December 29, 1945. CBI governors attend IMF's board discussions on Iran on behalf of the government. These meetings are usually held once a year in Washington, D.C.
)
, image_skyline =
, image_caption = Clockwise from top left: the Washington Monument and Lincoln Memorial on the National Mall, United States Capitol, Logan Circle, Jefferson Memorial, White House, Adams Morgan, ...
The Central Bank of Iran has an observer status
Observer status is a privilege granted by some organizations to non-members to give them an ability to participate in the organization's activities. Observer status is often granted by intergovernmental organizations (IGO) to non-member parties and ...
at the annual meetings of the Bank for International Settlements
The Bank for International Settlements (BIS) is an international financial institution owned by central banks that "fosters international monetary and financial cooperation and serves as a bank for central banks".
The BIS carries out its work thr ...
(BIS) in Basel
, french: link=no, Bâlois(e), it, Basilese
, neighboring_municipalities= Allschwil (BL), Hégenheim (FR-68), Binningen (BL), Birsfelden (BL), Bottmingen (BL), Huningue (FR-68), Münchenstein (BL), Muttenz (BL), Reinach (BL), Riehen (BS ...
, Switzerland
). Swiss law does not designate a ''capital'' as such, but the federal parliament and government are installed in Bern, while other federal institutions, such as the federal courts, are in other cities (Bellinzona, Lausanne, Luzern, Neuchâtel ...
.
Foreign exposure and transactions
* Iran's foreign debt: $22.07 billion in 2010 ($10.6 billion of short-term debts and $11.4 billion of mid-term and long-term debts).
* Iran's deposits in foreign banks: stand at $35 billion while its obligations amount to $25 billion (2007). In 2007, Iran
Iran, officially the Islamic Republic of Iran, and also called Persia, is a country located in Western Asia. It is bordered by Iraq and Turkey to the west, by Azerbaijan and Armenia to the northwest, by the Caspian Sea and Turkmeni ...
had $62 billion worth of assets held abroad. According to the Bank for International Settlements
The Bank for International Settlements (BIS) is an international financial institution owned by central banks that "fosters international monetary and financial cooperation and serves as a bank for central banks".
The BIS carries out its work thr ...
, Iran's deposits with 39 world banks reached $15.44 billion at the end of March 2012 while its obligations stood at $10.088 billion. In addition it was reported that Iran had between 10–20 billion dollars held in foreign banks in 2011, allegedly because of payment problems by foreign companies to Iran. According to E.U. sources, despite the European sanctions, Iran has still "several billion euros
The euro (symbol: €; code: EUR) is the official currency of 19 out of the member states of the European Union (EU). This group of states is known as the eurozone or, officially, the euro area, and includes about 340 million citizens . T ...
" deposited in accounts in Germany, Italy, Malta, Spain, Greece and Switzerland (2012). As at 2013, only $30 billion to $50 billion of its foreign exchange reserves
Foreign exchange reserves (also called forex reserves or FX reserves) are cash and other reserve assets such as gold held by a central bank or other monetary authority that are primarily available to balance payments of the country, influence ...
(i.e. roughly 50% of total) is accessible because of the international sanctions. Iranian media
The mass media in Iran are privately and publicly owned but is Censorship in Iran, subject to censorship. As of 2016, Iran had Iranian newspapers, 178 newspapers, List of Iranian magazines, 83 magazines, 15,000 information sites and Iranian blogs, ...
has questioned why assets and foreign reserves weren't repatriated (or converted into gold
Gold is a chemical element with the symbol Au (from la, aurum) and atomic number 79. This makes it one of the higher atomic number elements that occur naturally. It is a bright, slightly orange-yellow, dense, soft, malleable, and ductile met ...
) while new sanctions were being discussed abroad.
* Transactions: Foreign transactions with Iran amounted to $150 billion between 2000 and 2007 worth of major contracts and both private and government lines of credit
A line of credit is a Credit (finance), credit facility extended by a bank or other financial institution to a government, business or Personal finance, individual customer that enables the customer to draw on the facility when the customer nee ...
. According to the Bank for International Settlements
The Bank for International Settlements (BIS) is an international financial institution owned by central banks that "fosters international monetary and financial cooperation and serves as a bank for central banks".
The BIS carries out its work thr ...
(BIS), the balance of Iran's foreign exchange interactions in foreign banks and financial institutes during Q3 2008 stood above $24.3 billion.
US sanctions
The US Treasury Department
The Department of the Treasury (USDT) is the national treasury and finance department of the federal government of the United States, where it serves as an executive department. The department oversees the Bureau of Engraving and Printing and th ...
has also stepped up its attempt to restrict financing of foreign investment and trade with Iran. In January 2006, Swiss banks
Banking in Switzerland dates to the early eighteenth century through Switzerland's merchant trade and has, over the centuries, grown into a complex, regulated, and international industry. Banking is seen as emblematic of Switzerland, along with ...
UBS
UBS Group AG is a multinational Investment banking, investment bank and financial services company founded and based in Switzerland. Co-headquartered in the cities of Zürich and Basel, it maintains a presence in all major financial centres ...
and Credit Suisse
Credit Suisse Group AG is a global investment bank and financial services firm founded and based in Switzerland. Headquartered in Zürich, it maintains offices in all major financial centers around the world and is one of the nine global " ...
announced separately that they were halting operations in Iran. In September 2006 the Treasury Department banned all dealings by Bank Saderat Iran
Bank Saderat Iran (BSI) ( fa, بانک صادرات ایران, ''Bank Sadârat Iran'', lit. "Export Bank of Iran") is an Iranian multinational banking and financial services company headquartered in Tehran, Iran. It is Iran's largest bank. It ...
with the US financial system, and in January 2007 it also blacklisted Bank Sepah
Bank Sepah ( fa, بانک سپه, ''Bānke Sepah''), the first Iranian bank, was established in 1925 (corresponding to 1304 in the Iranian Calendar). Its first branch, in Tehran, opened that year.
The bank also has branches in Frankfurt, Paris an ...
and its British subsidiary, Bank Sepah International. In October 2007 the US Treasury blacklisted Bank Melli and Bank Mellat
Bank Mellat ( fa, بانک ملت, ''Bank Milât'', lit. ''People's Bank'') is a private Iranian bank. Its name means "Bank of the Nation". Bank Mellat was established in 1980, with a paid capital of Rials 33.5 billion as a merger of ten pre-revol ...
.
Under pressure from the US, 12 Chinese banks have reduced ties with Iranian banks since early September 2007, but five of them resumed commercial ties in mid-January 2008. In mid-February 2008, the US Treasury alleged that Iran's Central Bank helped the blacklisted banks evade US sanctions
The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country primarily located in North America. It consists of 50 states, a federal district, five major unincorporated territori ...
, by conducting transactions for them.
Barter trade
The Central Bank possesses limited foreign cash reserves due to the international sanctions and problems in the transfer of funds in and out of country. In 2012, The U.S. unilaterally expanded sanctions, which cut off from the US financial system foreign firms that do business with the central bank. Iran is reportedly making increasing use of barter trade
In trade, barter (derived from ''baretor'') is a system of exchange in which participants in a transaction directly exchange goods or services for other goods or services without using a medium of exchange, such as money. Economists distingu ...
, cash smuggling, gold
Gold is a chemical element with the symbol Au (from la, aurum) and atomic number 79. This makes it one of the higher atomic number elements that occur naturally. It is a bright, slightly orange-yellow, dense, soft, malleable, and ductile met ...
and local currencies of its trading partners to circumvent the international sanctions. The CBI has been blacklisted by the U.S. government due to the bank's involvement in the Iranian nuclear program
The nuclear program of Iran is an ongoing scientific effort by Iran to research nuclear technology that can be used to make nuclear weapons. Iran has several research sites, two uranium mines, a Nuclear reactor technology, research reactor, an ...
and it has been blocked from using SWIFT
Swift or SWIFT most commonly refers to:
* SWIFT, an international organization facilitating transactions between banks
** SWIFT code
* Swift (programming language)
* Swift (bird), a family of birds
It may also refer to:
Organizations
* SWIFT, ...
since March 2012 as a consequence.
Publications
The Central Bank of Iran publishes a variety of periodicals for general and specialist audiences including ''Economic Trends'', ''Bulletin'', ''Annual Review'', ''Economic Report'' and ''Balance Sheet''. Other publications include booklets, monographs and brochures. Many of those documents are also available in English
English usually refers to:
* English language
* English people
English may also refer to:
Peoples, culture, and language
* ''English'', an adjective for something of, from, or related to England
** English national ide ...
.
See also
* Banking and Insurance in Iran
Following the Iranian Revolution, Iran's banking system was transformed to be run on an Islamic interest-free basis. As of 2010 there were seven large government-run commercial banks. As of March 2014, Iran's banking assets made up over a third o ...
* Construction industry of Iran
* Economy of Iran
The economy of Iran is a mixed economy with a large state-owned sector and is the largest in the Middle East in terms of nominal GDP. It is the world's 21st largest by purchasing power parity (PPP). Some 60% of Iran's economy is centrally pla ...
* History of banking
The history of banking began with the first prototype banks, that is, the merchants of the world, who gave grain loans to farmers and traders who carried goods between cities. This was around 2000 BCE in Assyria, India and Sumeria. Later, in anci ...
* Imperial Bank of Persia
The Imperial Bank of Persia ( fa, بانک شاهنشاهی ایران, Bank-e Šâhanšâhi-ye Irân) was a British bank that operated as the state bank and bank of issue in Iran (formerly known as Persia until 1935) between 1889 and 1929. It ...
* Iranian oil bourse
The Iranian Oil Bourse ( fa, بورس نفت ایران), International Oil Bourse, Iran Petroleum Exchange Kish Exchange or Oil Bourse in Kish (IOB; the official English language name is unclear) also known as Iran Crude Oil Exchange, is a commod ...
* Iranian rial
The rial ( fa, ریال ایران, riyâl-è Irân; sign: ﷼; abbreviation: Rl (singular) and Rls (plural) or IR in Latin; ISO code: IRR) is the official currency of Iran.
There is no official symbol for the currency but the Iranian standar ...
(Iran's currency)
* Islamic banking and finance
Islamic banking, Islamic finance ( ar, مصرفية إسلامية), or Sharia-compliant finance is banking or financing activity that complies with Sharia (Islamic law) and its practical application through the development of Islamic economic ...
* List of central banks
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Central banks
Central banks
Central banks
This is a list of central banks. Countries that are only partially recognized internationally are marked with an asterisk (*).
Disappeared central banking jurisdictions
* – Bank of Amsterdam (1609- ...
* Ministry of Petroleum of Iran
The Ministry of Petroleum (MOP) ( fa, وزارت نفت, Vezârat-e Naft) manages the oil industry, the producer of oil and petrochemical products. MoP is in charge of all issues pertaining to exploration, extraction, exploitation, distribution ...
* Monetary and Banking Research Institute
The Monetary and Banking Research Institute (MBRI) (formerly known as Monetary and Banking Research Academy (MBRA)) is the research arm of the Central Bank of Iran.
Historical background
The Monetary and Banking Research Institute (MBRI) was esta ...
* Shetab Banking System Shetab (), officially the Interbank Information Transfer Network (), is an electronic banking clearance and automated payments system used in Iran. The system was introduced in 2002 with the intention of creating a uniform backbone for the Iranian ...
* Supreme Audit Court of Iran
The Supreme Audit Court of Iran (SAC) (Persian: دیوان محاسبات کشور) is a government agency of the Islamic Republic of Iran. Located in Tehran, it is supervised by the Iranian Parliament and dates back to 1906.
Articles 54 and 55 ...
* Taxation in Iran
Taxation in Iran is levied and collected by the Iranian National Tax Administration under the Ministry of Finance and Economic Affairs of the Government of Iran. In 2008, about 55% of the government's budget came from oil and natural gas reven ...
* Tehran Stock Exchange
The Tehran Stock Exchange (TSE) ( fa, بورس اوراق بهادار تهران, romanized: ''Burs-e Owraq-e Bahadar-e Tehran'') is Iran's largest stock exchange, which first opened in 1967. The TSE is based in Tehran. , 339 companies with a com ...
Citations
General and cited sources
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External link
{{Authority control
1960 establishments in Iran
Banks established in 1960
Iran
Iran, officially the Islamic Republic of Iran, and also called Persia, is a country located in Western Asia. It is bordered by Iraq and Turkey to the west, by Azerbaijan and Armenia to the northwest, by the Caspian Sea and Turkmeni ...
Economy of Iran
Government of the Islamic Republic of Iran