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this work, then we will be the first countries to use cryptocurrencies in the exchange of goods,” he added.
8.0 Financial & capital markets 8.1 Bank sector overview
Iran pushes towards Basel II banking standards with new diktat
Weak Iranian banking system to be ‘strengthened with major M&A programme’
The Central Bank of Iran (CBI) announced on April 28 that it will instruct banks to increase their capital adequacy ratio to 12% from 8% to meet Basel III banking regulations.
It is expected that several Iranian banks will be merged in coming months as their capital adequacy ratios are lower than the current required amount of 8%. Non-bank credit lending facilities have merged in recent years to meet ratio guidelines.
According to the CBI, updated guidelines are based on the latest international standards requested by the Swiss Basel Committee while also meeting requirements of the Islamic Financial Services Board and global Islamic banking rules.
The new move will see a further convergence of existing banks which have been ordered in recent months to find suitable partners to merge with as Iran cracks down on bad banking practices.
According to previous reports, the bank mergers will come in three waves, with small banks including Mehr Eqtesad, Samen and Ansar expected to be merged. Some non-bank credit institutions will be merged with local banks.
Iran has faced waves of protests with several credit institutions going under. The biggest public display of outrage occurred in relation to Caspian Credit Institution. Caspian was formed through the merger of several credit institutions and cooperatives including Ferdowsi and Badr Toos, Tose’eh, Noor, Asgarieh and Kowsar.
8.1.1 Liquidity
Iran’s liquidity volume exceeds IRR14.6 quadrillion at end of 10th Persian month
The total volume of liquidity in Iran stood at more than IRR14.63 quadrillion($325.62bn)bytheendofthe10t h Persiancalendarmonth (ended January 20), according to the Central Bank of Iran (CBI), Mehr News Agency reported on March 12.
The Central Bank of Iran (CBO) is presently aiming to keep as much liquidity in the system as possible to stimulate the economy; this is achieved in part by lowering the interest rate on savings accounts offered by banks and by limiting foreign currency withdrawals to a maximum of $1,000, recent decree issued on March 10 stated.
The monetary and banking sections of the latest CBI report on economic indicators determine that liquidity in Iran in the commercial sector increased by 22.3%y/ytoreachIRR11.96quadrillion($266.2bn)bytheendofthe10t h Persian month.
25 IRAN Country Report June 2018 www.intellinews.com