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Why Iran’s banking shake-up won't be enough

The first shake-up of Iran's banking sector in three decades is only the first step toward supporting the economy.
Iran's head of Atomic Energy Organisation (IAEO) Ali Akbar Salehi (L) talks with the Head of the Central Bank of Iran, Valiollah Seif, as they arrive for a press conference of Iranian President on January 17, 2016 in the capital Tehran after international sanctions on Iran were lifted. 

President Hassan Rouhani said that sceptics who said a nuclear deal with world powers would not bring benefits to Iran were all proven wrong.

 / AFP / ATTA KENARE        (Photo credit should read ATTA KENARE/AFP/Getty Im

TEHRAN, Iran — On July 24, Valiollah Seif, the governor of the Central Bank of Iran (CBI), unveiled the Central Bank and Usury-Free Banking Reform Bill, also known as the Banking Reform Bill, to support sustained acceleration in economic growth and broad expansion of the private sector, which is currently suffering from a credit crunch in the Iranian financial system. If approved by the government, the bill will then be sent to parliament.

Iran's current banking laws are decades old and have never been comprehensively reviewed by any administration subsequent to the 1979 Islamic Revolution. Indeed, Seif said, the Central Bank Law was last revised in 1983 and before that in 1972. Under President Mahmoud Ahmadinejad (2005-13), some efforts were made to begin revising the laws and regulations governing the sector — under the framework of the government’s broader Economic Development Plan — but nothing really became of it.

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