At the recent meeting of Council of ministers on 23th of July, 2017, they reviewed the report of committee on economy on the bill of Bank’s Monetary and Banking Law`s amendments.
The bill focuses on laws about regulation, depositary funds, bankruptcy, liquidation of banks and credit institutions. Based on this bill, Iran’s currency should be Toman and it is equal to 10 Rials. Authorities declared that purpose of this bill is to provide stability of monetary and banking system and also to protect interests of depositors in the case of institution’s bankruptcy.
In addition, in order to declare the non-professional performance of members to Central Bank of Iran, making decision and taking action in order to avoid unfair competition among members, coordinate and decide on how to advertise and inform in the framework of central bank’s regulation, association of banks will be formed and all credit institutions are required to become a member of that.
In this article, we discuss pros and cons of changing currency from Rial to Toman.
Changing currency from Rial to Toman is a good action because in routine transactions using Toman is common among people, a member of parliament said. He also added that at the moment Rial is used in financial and accounting documents and sometimes this can lead to some mistakes for people. Therefore, changing the currency will facilitate economic transactions and it can be unified by using Toman. But note that existence of economic stability and low inflation are the necessities to change the national currency, he continued.
On the other hand, for many years in Iran people have been doing their transactions based on Toman therefore with changing the currency, in reality nothing will happen in our domestic transactions, an economic expert said. In the sense that if such an action won’t become operational, people wouldn’t be in any trouble on their daily transactions. Therefore, contrary to the statements which emphasize that by changing the national currency from Rial to Toman, the value of our national currency goes up, it should be noted that the value of national currency will only increase nominally. At the moment, in most of our country’s transactions Rial doesn’t play any role.
“We did not remove the Rial, but the Rial is one tenth of a Toman, The government spokesman, Mohammad Baqer Nobakht, said according to Donyaye Eghtesad Newspaper. ” There is no plan for printing any new banknotes, he added. However, since then, we can do this on a Toman basis with the policy of refilling the banknotes, and it is not supposed to cost 3 trillion Tomans, he answered rumors about this bill’s costs. He also told reporters in a press conference in response to a question that the economic commission disagreed with the decision: “Our monetary and banking law is for 40, 50 years ago, and in the amendment to the monetary and banking law, more than 80 articles are updated and submitted to the parliament in which one of the cases is about the national currency Toman instead of the Rial.
In this regard, according to valiollah seif, governor of Central Bank of Iran, the government’s bill on changing the national currency from Rial to Toman is an attempt to facilitate the relative economic transactions of all sectors of society, to formalize the custom accepted by the people of the country, and to adapt to the existing realities of the country.
Reforming the currency means eliminating a few zeroes and changing the currency as a matter of fact, is a process that is in the bank’s priorities, and its implementation requires the achievement of favorable economic conditions, such as sustained one-digit inflation and economic stability. Therefore, the recent resolution is distinct from the above subject and should not be interpreted in a same way.
The recent government’s command has no psychological and inflationary effects, and due to the availability of appropriate information technology and the expansion and appropriate influence of e-banking in the country, it is feasible with the least cost and time.
To conclude all different point of views and analyses that mentioned above, it seems that changing national currency in order to adapt with daily procedures of people in the society is a good action and avoid from many mistakes in transactions but eliminating more zeros from national currency and printing new money based on Toman is a greater action which needs more peer view and stability of economic conditions is of its prerequisites. Along this way, it’s better not to overlook the experience of countries such as Brazil, Turkey, Netherlands, Germany and etc. in the case of changing national currency.