The Central Bank of the Islamic Republic of Iran (CBI; ; SWIFT Code: BMJIIRTH), also known as Bank Markazi, was established under the Iranian Banking and Monetary Act in 1960. It serves as the banker to the Iranian government and has the exclusive right to issue banknotes and coinage. CBI is tasked with maintaining the value of the Iranian rial and supervision of banks and credit institutions. It acts as custodian of the National Jewels, as well as the foreign exchange and gold reserves of Iran. It is also a founding member of the Asian Clearing Union, controls gold and capital flows overseas, represents Iran in the International Monetary Fund (IMF) and internationally concludes payment agreements between Iran and other countries.
The Governor of the Central Bank of Iran since a December 2025 currency collapse is Abdolnasser Hemmati, who replaced Mohammad-Reza Farzin.
In November 2023 after 50 years the central bank was revamped fully and changed to include Islamic Republic Development Bank. The Central Bank was cyberattacked by IRLeaks in August 2024. The Iranian government was forced to pay ransom to the hackers in order to secure the data of Iranian customers.
History
In August 1960, the Iranian government established the Central Bank of Iran (CBI) by reorganization of the central banking responsibilities previously exercised by Bank Melli Iran. Scope and responsibilities of the Central Bank had been defined in the Monetary and Banking Law of Iran (1960).
Following the 1979 Iranian Revolution, the Central Bank of Iran was renamed to "the Central Bank of the Islamic Republic of Iran", and Iran's banking system adhered to the new Islamic rules that prohibit earning or paying interest in 1983.
Mohammad-Reza Farzin was appointed Governor of the Central Bank on 29 December 2022, and was reappointed to the position in October 2024
The Central Bank was cyberattacked by IRLeaks in August 2024. The central bank was one of 20 banks out of 29 Iranian banks, attacked by the group. The cyber attack on the Iranian banking sector was described by Politico as the "worst attack" in Iranian history. The Iranian government was forced to pay ransom to the hackers in order to secure the data of Iranian customers.
On 25 June 2025, Israeli defense minister Israel Katz signed an order declaring Central Bank of Iran, Shahr Bank, Mellat Bank and Sepehr Energy Jahan, company owned by Iranian Armed Forces, of being terrorist organizations due to their alleged roles in financing pro-Iranian militant groups and terrorism on behalf of IRGC and Quds Force. Israel also declared three of the bank's senior officials as terrorist operatives.
In December 2023, Central Bank and Minister of Economy ordered merger of private Nour Credit Institution with 400,000 billion rial debt into government Bank Melli.
Objectives and functions
The objectives of the Central Bank of the Islamic Republic of Iran as per its charter and according to section 10 of the Monetary and Banking Law of Iran (MBAI) are as follows:
Maintaining the value of national currency Maintaining the equilibrium in the balance of payments Facilitating trade-related financial transactions Improving the economic growth potential of the country To achieve the objectives as stated in the MBAI, CBI is endowed with the responsibility of fulfilling the following functions: Issuance of notes and coins Supervision of banks and credit institutions Formulation and regulation of foreign exchange policies and transactions Regulation on gold transactions Formulation and regulation on transactions and inflow/outflow of Domestic currency
Organization
Money and Credit Council The Money and Credit Council (MCC) is the highest banking policy-making body of Bank Markazi. Its permanent members include the CBI Governor, the Finance and Economy Minister, two Ministers chosen by the Cabinet, The Head of the Chamber of Commerce, the General Prosecutor and two lawmakers (MPs).
Each year, after approval of the government's annual budget, the CBI presents a detailed monetary and credit policy to the MCC for approval. Thereafter, major elements of these policies are incorporated in the five-year economic development plan. MCC meets every three months.
In practice, the ability of the banking system to create money is not much constrained by the amount of scriptural money through fractional reserve banking. Indeed, most banks first extend credit and look for reserves later. The Iranian Central Bank needs more independence from the government in order to combat inflation, according to the country's Parliament Research Center. As of 2010, Iran's Central Bank, is not able to conduct a "proactive" monetary policy (e.g. it needs Majlis' approval before issuing participation bonds) and has no control over the government's fiscal policy.
General Assembly The current combination of the Central Bank's board of directors are the President, Economy and Commerce Ministers, Deputy-President for strategic planning, and a Minister selected by the Cabinet.
"Reform" proposal Seven economists with at least 15 years of work experience were to become members of the general assembly according to a new law proposed by the Majlis in 2010, thus moving this body from being state-dominated to one where the private sector has greater say in the decision-making process. The tenure of each member would be for 10 years and only for one term. Then President Mahmoud Ahmadinejad criticized this proposal and said that it is important for the Central Bank of Iran not to fall under private control "because it would not benefit the Iranian people" over the long run.
Monetary policy
Double digit inflation rates have been a fact of life in Iran for the past 20 years. Between 2002 and 2006, the rate of inflation in Iran has been fluctuating between 12 and 16%.
Monetary policy in Iran has not been successful in meeting the inflation and monetary targets set in the Iranian Five-Year Development Plans, owing mainly to the monetary impact of government spending out of oil revenue. Although the attainment of the inflation targets has improved somewhat recently, the objective of a gradual disinflation to single-digit levels has not been achieved. Moreover, the implicit intermediate target of monetary policy, money growth, has been systematically missed.
The Central Bank is an extension of the Iranian government and as such it does not operate independently. Interest rate is usually set based on political priorities and not monetary targets. There is little alignment between fiscal and monetary policy.
The Central Bank assesses the inflation rate with the use of the prices of 395 goods and services in Iran's urban areas.
High levels of inflation have also been associated with a growth in Iran's money supply. The Central Bank's data suggest that the money supply growth has been about 40% annually. The rapid growth of money supply came from high demands for borrowing capital at the rate of 12% the banks offer, imposed by the Government to make credit accessible to average Iranians and small entrepreneurs. However, this rate is lower than the rate of inflation. This makes the cost of borrowing less than free market cost as determined by supply and demand, based on the inflation rate and investment risk.
Direct instruments Banking profit rates – As of 2010, the interest rate charged between banks (i.e. interbank rate) is set by the government of Iran. Credit ceiling – the CBI can intervene in and supervise monetary and banking affairs through limiting banks, specifying the mechanisms for use of funds and determining the ceiling of loans and credits in each sector.
Indirect instruments Reserve requirement ratio – According to Article 14 of the Monetary and Banking Law of Iran, the CBI is authorized to determine reserve requirement ratio within 10 to 30 percent depending on banks’ liabilities’ composition and field of activity. CBI Participation Papers – The Central Bank must obtain approval from the Majlis in order to issue participation papers. Open deposit account (ODA): control liquidity through absorption of banks’ excess resources. The CBI pays "profit" to these deposits with the CBI on the basis of specific rules.
Money supply
The International Monetary Fund (IMF) reports that in 2001, currency and demand deposits—an aggregate commonly known as M1—were equal to $71.7 billion. In that same year, M2—an aggregate equal to M1 plus savings deposits, small time deposits, and money market mutual funds—was $153.6 billion. According to the CBI, the country's liquidity amounted to some $174 billion by April 2008, $197 billion by October 2009. and over $300 billion in 2011.
Money in circulation reached $700 billion in March 2020 (based on the 2017 pre-devalation exchange rate). (Iran's monetary base reached 3,721.46 trillion rials (nearly $12 billion) in September 2020 while M2 reached $95 billion (i.e. 26% and 36.2% increase in one year respectively), while the money multiplier effect (which shows how much the monetary base could create new money in the economy) had reached an all-time high), thus explaining the rise in inflation (40%) and of the fall of the Iranian rial in recent years. The Iranian rial has fallen almost five-fold since the beginning of 2018. In turn, Iran's forex reserves have fallen, as Iran is trying to maintain the value of its currency by injecting forex into the market to meet the demand for US dollars by the general public and companies and pay for imports.
In turn, the cause of this is due to inefficient taxation in Iran and tax collection (and tax evasion in particular). Inflation (or loss of purchasing power) being a uniform hidden taxation on the population (unless compensated by an increase in salaries and productivity) which adversely affects the lower strata of the Iranian population the most.
Financials
Source: International Monetary Fund (In billions of rials; unless otherwise indicated) Prel. 2008/09 Proj. 2009/10 Net foreign assets (NFA) 703,329 789,498 In millions of U.S. dollars 72,381 77,050 -Foreign assets 773,352 863,336 In millions of U.S. dollars 79,587 84,257 -Foreign liabilities 1/ 70,023 73,839 In millions of U.S. dollars 7,206 7,206 Net domestic assets (NDA) -139,843 -225,654 Net domestic credit -5,141 21,083 -Central government, net -283,735 -228,046 Claims 74,779 74,779 Deposits 358,514 302,824 -Claims on banks 239,758 206,409 -Claims on non financial public enterprises (NFPEs) 38,836 42,719 -Other items net, excluding central bank participation papers (CPPs) -134,701 -246,737 Base money 556,925 556,925 Currency 206,352 200,745 -Currency in circulation 157,764 153,478 -Cash in vaults 48,588 47,268 Reserves 334,495 338,445 -Required reserves 225,228 307,757 -Excess reserves 109,267 30,688 Deposits of NFPE and municipalities 16,078 17,734 Other liabilities 6,561 6,919 -CPPs 0 0 -Foreign currency deposits of NFPEs and municipalities 6,561 6,919 Memorandum items:End-period change (in percent of base money) -Base money 45.4 0.0 -NFA 13.4 15.5 -NDA (net of other liabilities) 32.0 -15.5
Note: 1/ Includes some liabilities in foreign currency to residents.
Government and private sector debt
As of December 2019, the government debt to banks reached 3,880,000 billion rials (approx. $30 billion, which is a 3.5% rise since 2013 when President Rouhani took office). This means that the government prints money, which is made available to banks the state controls in Iran and then it borrows from these banks at interest. The private sector's debt to banks in the twelve-month period ending on 20 December 2019, reached 14,400,000 billion rials or more than $110 billion.
Payment systems