Money Supply Paradox Afflicts Iran’s Economy

EghtesadOnline: Why do producers, traders and other economic players complain about lack of resources, despite a 35% growth in money supply? Why are banks struggling with the provision of credit? Abdolnasser Hemmati, the former head of the Central Bank of Iran, prefaced his write-up for the Persian daily Donya-e-Eqtesad with these questions.

News ID: ۷۵۲۲۹۷

21 February 2023

Why do producers, traders and other economic players complain about lack of resources, despite a 35% growth in money supply? Why are banks struggling with the provision of credit? Abdolnasser Hemmati, the former head of the Central Bank of Iran, prefaced his write-up for the Persian daily Donya-e-Eqtesad with these questions.

A translation of the text follows:

The rapid growth of foreign exchange rates against the rial in the open market, and more importantly, the discontinuation of the allocation of subsidized currency to import essential goods are to blame.