Liquidity consists of two main parts: money and near money. The money is equivalent to sight deposit, banknotes, coins and near money is equivalent to saving deposit. Based on Iran’s monetary and banking statistics, in the first month of second quarter, the annual growth rate of money hit 34.7% as the highest level during last five years, and also this rate for near money was 18.1% which decreased 6% compared to the same period of last year. Given the greater correlation between money (compared with near currency) and inflation, current changes in liquidity composition lead to higher rate of inflation. The beginning of the mentioned changes in the liquidity composition refer to reduction policy of the interest rates in the past year. Currently, the only strategy to change the direction of inflation is using monetary tools otherwise it’s not out of mind to experience more inflation in the near future. During the first three months of current year, about 530,000 billion Rials injected into the economy which is equivalent to about 170,000 billion Rials per month. Although the increasing trend of liquidity has continued in recent months but its growth rate has fallen during the mentioned period of time. As an example, spot-to-spot growth rate of liquidity in first month of second quarter was 20.1% while the above rate reached 20.4% in last month of first quarter. Although liquidity growth is slowly declining but the continuation of this trend requires the reform of the banking system and following that, less pressure to monetary base by banks. In this regard, it can be pointed to recent comments of Masoud Nili, economic advisor to Iran’s government. He considers debt of banks to Central Bank of Iran as the main factor in increasing monetary base. So, he believes that reforming the main elements of monetary base (which are including net assets of the CBI, government debt to CBI and debt of banks to CBI) and as a result achieving to lower volume of liquidity can led to more stable economy.
All in all, the volume of Iran’s liquidity is about 16,000,000 billion Rials at the moment. The lack of adequate absorption capacity for the current liquidity in assets market has led to a lot of problems in the economy. The speculative nature of liquidity in Iran has made it hard to guide the liquidity towards productive sectors. In order to guide the liquidity correctly, the government can use some temporary solutions such as tax cuts on the capital market and increasing the supply of government bonds to achieve less destructive effects in the market of other nominal assets. Although liquidity growth is one of the main problems of Iran’s economy but if the strategies of our well-trained economists are implemented in an appropriate time, the current situation of economy can be improved.