In the Iranian economy, the main burden of financing households, business enterprises, and the government rests primarily on the banking system. The role of commercial banks in defining the ultimate objectives of monetary policy, implementing these policies, and incorporating their considerations in the context of banking interest rates must receive increasing attention. In this regard, the present article seeks to introduce and provide a framework and model for deepening and enhancing the effectiveness and role of the interbank market in improving the position of commercial banks within monetary policy. Accordingly, an up-to-date model tailored to the requirements and characteristics of the Iranian money and credit market will be introduced to influence banks through four channels: (1) improving the quality of interbank transactions and deepening the market to increase banking interactions, (2) directing the government to fully rely on borrowing from the banking system through bond issuance and moving away from indirect financing via state-owned banks, (3) enhancing the capacity of commercial banks to influence the central bank in safeguarding their interests (preventing the imposition of mandated interest rates inconsistent with the objectives and interests of commercial banks), and (4) strengthening the transmission effect of monetary policy and policy interest rate adjustments in the credit market. Improvement of the stated indicators across these four dimensions can contribute to reforming governance in commercial banks, enhancing their financial ratios, restructuring the relationship between commercial banks and the government, and increasing the effectiveness of banks in the implementation and execution of monetary policies.
Mohseni et al. (Wed,) studied this question.