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Paper Information

Journal:   MAJLIS & RAHBORD   FALL 2014 , Volume 21 , Number 79; Page(s) 223 To 250.
 
Paper: 

MONETARY REFORM AND NATIONAL CURRENCY REFORM IN IRAN

 
 
Author(s):  MEHRARA MOHSEN, KHANDAN SOVEYRI MEHDI
 
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Abstract: 

The third pillar of Plan on Economic Evolution, called "National Currency Valuation System Reform" clarifies the importance of dropping zeros and changing national currency. This paper reviews similar experiences in other countries and calculates total cost of currency reform in Iran by analyzing banknotes and coin production, processing and destruction cost, software change in financial institutions and so on. The cost of reform in national currency is estimated about 2000 billion Tomans - almost equivalent to 37 percent of GNP or 1.4 percent of public budget in 1391. Results in this paper show that national currency reform will succeed if it is implemented in a large context called monetary reforms, which in turn will decrease the inflation expectations. Factors such as an independent central bank, proper exchange rate regimes and decreasing government budget deficit are crucial for the success of currency reform.

 
Keyword(s): MONETARY REFORM, NATIONAL CURRENCY REFORM, AN INDEPENDENT CENTRAL BANK, INFLATION EXPECTATIONS
 
References: 
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