Hemmati Defends CBI Performance

Abdolnasser Hemmati recalled that his team had steered the central bank through unusually tough economic times as a result of the US economic blockade. 

"Despite the pressures and restrictions, the central bank's performance is defendable," he told the meeting, the CBI website reported. 

He pointed to efforts to curb meteoric growth in foreign exchange rates despite the historic decline in the country's forex revenues.

"Overall crude oil income in the past two years was less than $20 billion," he said, referring to the tough sanctions imposed on oil export in 2018 by Donald Trump, the infamous former US president, after he left Iran's nuclear deal in May that year. 

Drawing parallels between forex rates in October 2018, when the dollar briefly touched 190,000 rials, with present forex rate (1 USD=245,000 rials), Hemmati claimed the hike was not abnormal.

The greenback dropped sharply to almost half in 2018 after the sharp surge in October and closed fiscal 2019-20 at around 160,000 rials. It gained more than 60% in the current fiscal year that ends on March 20.  

As for other achievements, he pointed to streamlining the payment system in the country. "The payment industry has a pivotal role when it comes to fighting tax evasion, online gambling, smuggling and money laundering", he said.  

The senior banker said transparency in the banking system had been augmented in the outgoing year with the introduction of electronic platforms. 

Inflation expectations are under control as a result of CBI measures "without the need for a contractionary policy," he was quoted as saying.   

Contractionary policy is a monetary measure referring either to a reduction in government spending—particularly deficit spending—or a reduction in the rate of monetary expansion by a central bank. 

Despite calls from many quarters to raise interest rates to fight inflation, he said the CBI refused to increase rates especially to support the ailing stock market.

"The central bank in its decisions considers sees the economy as a whole and adopts monetary policies accordingly.” 

As for other CBI accomplishments, he referred to completion of a big bank merger and efforts to control banks' balance sheets. 

The regulator is exercising a “cautionary” policy to control the balance sheets of banks with poor financial performance. As per a plan announced by the Money and Credit Council, the CBI examines banks' balance sheets on a quarterly basis. 

The CBI wrapped up a megamerger project involving five banks affiliated to the military forces last December after an arduous two and a half years. It involved Bank Sepah, the oldest in Iran and one of the three still under government ownership, four banks and one credit institution owned by the Iranian armed forces, namely Ansar Bank, Bank Hekamat Iranian, Mehr Eqtesad Bank, Ghavamin Bank and Kosar Credit Institution.