As the supervisory and regulatory authority to the money market in Iran, the Central Bank of Iran (CBI) established in 1960 is responsible for the design and implementation of the monetary and credit policies with regard to the general economic policy of the country. Four major objectives of the CBI are as follows:

  • Maintaining the value of home currency,
  • Maintaining the equilibrium in the balance of payments,
  • Facilitating trade-related transactions,
  • Improving the growth potential of the country.

The CBI also has oversight of fulfilling the following functions to achieve its core objectives:

  • Issuance of notes and coins,
  • Supervision of banks and credit institutions,
  • Formulation and regulation of foreign exchange policies and transactions,
  • Regulation on gold transactions,
  • Formulation and regulation on transactions and inflow/outflow of home currency.

The CBI is mandated to keep government accounts, grant loans and credits to state enterprises and agencies. It also covers such functions as lending facilities to banks, purchase and sale of government participation papers as well as other legal banking operations. The CBI is responsible for the design and conduct of monetary policy within the context of government's five-year development plan and annual budget. According to Monetary and Banking Act, the CBI is responsible for formulating the monetary and credit system of the country, formulating the regulations pertaining to outflow as well as repatriation of home and foreign currencies, foreign exchange transactions, commitments and guarantees with the approval of the Money and Credit Council; formulating the required regulations so as to control gold transactions with the approval of the Board of Ministers, determining the required regulations, approvals and circulars applicable to banks and credit institutions in the framework of the monetary and credit system of the country.

The Money and Credit Council (MCC) is the highest banking policy-making body of the money market. It is the macro-policy maker of the money market in Iran and sets relevant core strategies. Its permanent members include the CBI Governor, the Finance and Economy Minister, two Ministers chosen by the Cabinet, the Head of the Chamber of Commerce, the General Prosecutor and two lawmakers (MPs). I. It provides advice to the CBI on general policy matters and decides on a number of issues pertaining to its supervisory role on monetary and banking regulations, under the banking laws.

Money Market Structure

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