Articles

The Central Bank

The Banking system activities within country's economy are generally divided into two basic fields

1. Adopting monetary policies
2. Performing banking transactions

Adoption and implementation of monetary policies:

As the co-ordinator of monetary and credital policies, central bank has both the adopting and supervisory duties of successful implementation of the mentioned policies. The main goal for exertion of such policies includes the efficient co-ordination of existing supplies and demands of financial sources within country's economy as a whole, in a way which facilitate the accomplishment of country's stated goals for economic development programs.
Due to various phenomena, such as necessary adjustments made in foreign exchanges and extensive investment activities of governmental and private sectors in producing and infrastructural areas, generally demands for cash money (cash flow) within country's economy greatly increased in recent years and consequently the crucial task of adoption of new monetary policies was again granted to the Central Bank. Thus, to balance the government's budget the Central Bank not only attempted to base the new monetary policy on restriction of the growth of cash money, but also in 1994 introduced the following measures to implement the newly stated policy:

The Banking system's performance in 1994:

Setting certain ceiling for Banking services and facilities, transferable to governmental, private and cooperative sectors by the country's Banking system.
Allocating larger amounts of Banking credital services to non-governmental and private sectors, in such way that the largest share (equal to 36%) would be allocated on mines and industries, 30% on construction and housing sectors and the remaining 15% would cover the exports, service and commercial sectors.
The minimum and maximum interest rates for granted Bank loans and services to various sectors in 1993 remained unchanged, just like that of 1993 (agricultural sector 12-16%, industries and mines 16-18%, construction - 15%, as well as service and commercial sector 18-24%).
The Banking system (in 1993) demonstrated a remarkable performance and an appreciable success both in absorbing the country's deposit sources and allocating the available resources on various economic sectors, in accordance with its annual targeted goals. Through implementation of necessary monetary and credital policies in 1994 the growth rate of cash money (cash flow) practically showed a lower figure, only 28.5% as compared with 34.2% of the previous year, and at the end of the same year the volume of cash money also included 61844 billion Rials.

The Banking system's performance in 1994:

Such considerable decrease, considering the governmental and private sector's needs for more cash money for the execution of numerous investment projects, certainly marked yet another outstanding achievement of the Central Bank in implementation of 1994's monetary policies. More importantly, due to the public trust in country's Banking system, the Banks attempts for absorbing the needed deposits were fruitful and thus great volumes of deposits were entrusted to numerous banks nation wide by the end of 1994 fiscal year. Also the share of current Bank notes and coines in circulation decreased to almost 14.1 in 1994, indicating the lowest ratio during the previous 20 years.