The twelfth government broke the record of liquidity increase after the revolution

According to IRNA, one of the most important crises left behind by the previous government was high and growing inflation. Experts have cited various reasons for the growth of inflation in recent years, including the growth of high liquidity. The statistics of the central bank show that the record of the highest liquidity growth after the revolution was broken in 2019. Accordingly, in 2019, the annual growth of liquidity reached an unprecedented figure of 40.6% by crossing the 40% mark.

The continuous growth of the liquidity growth index in the last three years of the last government created a strong stimulus for the peak of inflation in the last months of the last government and the beginning months of the 13th government. Inflation that is now affecting the people and has made it difficult for the majority of people to meet their living expenses.

The weak management of the central bank in the Rouhani government, especially during the Hemmati period, laid the groundwork for the unbridled growth of liquidity in the country and caused the heavy pressure of inflation on the people. However, the 13th government, immediately after taking office, took action to establish discipline in the country's monetary system. One of the serious steps taken by the Central Bank of the Thirteenth Government in order to regulate the functioning of the banking network in creating liquidity is to impose restrictions on the growth of banks' balance sheets. In this regard, the central bank limited the balance sheet growth of banks with poor capital adequacy to 1.5% and banks with favorable capital adequacy to 2.5%.

Statistics show that the growth of banks' facility balances, as the main engine of liquidity growth, has significantly decreased after the implementation of this policy compared to the same period last year.

Thus, the growth of liquidity in the 13th government decreased and reached 39% at the end of 1400 and 37.8% in June of this year. Due to the delay in the effect of monetary components on inflation, it is expected that the continuation of the trend of reducing the growth rate of liquidity will lead to a faster decrease in inflation in the coming months.

Source https://www.globalcourant.com/the-twelfth-government-broke-the-record-of-liquidity-increase-after-the-revolution/?feed_id=10658&_unique_id=62f8959c39f95