• Mon / 1 June 2020 / 11:21
  • Category: Economy
  • News Code: 99031207000
  • Journalist : 71296

Iran should adopt gold-backed currency board: Steve Hanke

Iran should adopt gold-backed currency board: Steve Hanke

Tehran (ISNA) – Iran’s government has recently decided to slash 4 zeroes from its money. For discussing the results of this decision and the ways to stabilize the currency market; we’d asked professor Hanke for a commentary.

Steve Hanke is a Professor of Applied Economics at the Johns Hopkins University in Baltimore (USA). He is one of the world's leading experts on currency boards and measuring and stopping hyperinflations.

Slashing four zeroes will change nothing in reality 

Asked about the government’s decision for slashing zeroes, Hanke said: Iran's proposal to remove four zeros from the rial will be like going under the knife of a plastic surgeon. Appearances change, but, in reality, nothing changes.

Effect of Corona Pandemic on the currency market

Iran is among the countries which have been hit hardest by corona virus. Hanke said:  The coronavirus pandemic will continue to have a negative effect on the Iranian rial, which has depreciated 24% against the greenback since the first of the year.

Suggestions for stabilizing currency market

 "The Iranian government should abolish the central bank and adopt a gold-backed currency board for Iran," Hanke said, adding that:"With such a currency board system, Iran would still have its rial. But, instead of being a junk currency, it would be as good as gold. That result would be obtained because the rial would be fully backed by gold reserves and would be freely convertible into gold at an absolutely fixed exchange rate. In my book, Currency Boards for Developing Countries, published in Farsi in 2018, I lay out such a strategy for Iran."

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