Iran to issue certificates of deposit in euros to curb liquidity
The Central Bank of Iran (CBI) is planning to issue certificates of deposit in euros as it struggles to contain liquidity and tame the rising inflation in the country.
CBI Governor Abdolnaser Hemmati said that the certificates will be issued after obtaining the required approval from Iran’s Money and Credit Council, Press TV reported.
Hemmati did not elaborate on the interest rate and maturity date of the new debt instruments although similar certificates of deposit issued by the CBI and other Iranian banks normally mature after one year and have a yield of more than 20 percent.
He said issuing the certificates would be in line with CBI’S current programs to manage liquidity and control inflation around a target of 22 percent.
Hemmati said the CBI would rely on its “abundant euro reserves” to pay the yields and principal of the certificates of deposit at their maturity dates.
The plan comes several days after the CBI announced it would raise the interest rate on deposits in the interbank market from 10 percent to 12 percent.
It also comes amid efforts to calm a foreign exchange market in which prices of international currencies have soared to record highs.
The CBI has been using the euro instead of the dollar as its benchmark foreign currency since the United States imposed a series of sanctions on Iran in 2018.