Tehran, Iran, April 17
Trend:
The Governor of Central Bank of Iran (CBI) announced details of the Open Market Operation plan.
"According to my promise, following approval by the Supreme Council of Economic Coordination and the Parliament, the Monetary and Credit Council approved the Open Market Operations (OMO) guidelines on April 16,” the governor of CBI AbdulNasser Hemmati said in a statement in his Instagram account, Trend reports.
“The Central Bank’s main task is monetary policy making and supervision of the performance of the banks,” he said. “The monetary policy tool is a short-term interest rate. The OMO is a structure allowing the Central Bank to control the inflation rate.”
“On the other hand, the Central Bank will monitor the balance sheet of banks with a set of factors such as capital adequacy ratios. Part of these policies includes limiting the composition and quality of banks' assets,” AbdulNasser Hemmati added.
The parliament approved the section of next year (March 2019 - March 2020) budget bill that allows the Central Bank of Iran to launch secondary markets for trading Islamic bonds issued by the government. The measure is aimed at curbing inflation, the Parliament’s news website ICANA reported.
Paragraph 5 of the budget bill implies implementing monetary policy, controlling interest rates and curbing inflation. Moreover, according to the same paragraph, the regulator can launch open market operations to trade Islamic bonds issued by the government and use them as collateral to lend to banks.
The bill emphasizes that the CBI is allowed to trade only with Islamic bonds that are issued by the government in the secondary market and at the prices floated therein.