Iran may not be able to print enough Rials

Western economic sanctions imposed on Iran over its disputed nuclear program have severely depressed the value of its national currency, the rial, causing higher inflation and forcing Iranians to carry ever-fatter wads of banknotes to buy everyday items. But the sanctions also have presented a new complication to Iran’s banking authorities: they may not be able to print enough money.

At least one major European engraving company that has been providing currency production services to Iran says it has stopped doing business there. The company, Koenig & Bauer AG of Würzburg, Germany, also says it has not responded to an Iranian request for bids to make the presses to print new rials.

Koenig & Bauer’s disclosure was contained in a mailed response to a query by United Against Nuclear Iran, a New York-based sanctions advocacy group, which seized upon the 40 percent drop in the rial’s value this month to begin a new campaign aimed at the currency itself.

The group began by pressuring the Europe-based banknote industry, which has historically counted Iran as a client, into further ostracizing the country by denying its central bank the basics of a functioning currency system: the printing presses, engraving paper, anticounterfeiting technology and other services needed to provide enough rials.

“By manipulating and increasing the printing volume of the rial, the regime can bolster its floundering currency and mask the disastrous impact of its political decisions, economic mismanagement and isolation,” Mark D. Wallace, the chief executive of United Against Nuclear Iran, said in announcing the campaign.

In letters Mr. Wallace wrote to Koenig & Bauer and two other companies in the banknote business, De La Rue P.L.C. of Hampshire, England, and Flint Group of Luxembourg, he said that European Union sanctions already prohibit Europe-based banknote companies from providing such services to Iran’s central bank. Mr. Wallace wrote that his group would be “contacting relevant regulatory officials in Luxembourg and the E.U.” to ensure enforcement.

Rob Hutchison, a spokesman for De La Rue, said Tuesday in a telephone interview that his company was in compliance with the sanctions. “We don’t provide technical support or services to Iran,” he said.

Officials at Flint Group did not immediately return phone and e-mail requests for comment.

As inflation erodes the rial’s purchasing power, Iran’s central bank must increase the supply of money, which risks what economists call hyperinflation, a cycle of rising prices and rising volumes of money in circulation. Denying the bank’s ability to increase the supply of money would theoretically hasten an economic crisis.

Some economists, however, say United Against Nuclear Iran’s campaign to restrict rial circulation may have the unintended consequence of helping Iran. They point to examples of other countries that have suffered hyperinflation, notably the former Yugoslavia in 1992-1994 and Zimbabwe in 2007-2008. In both cases, the authorities could not print money fast enough to outpace their currency’s falling value and the systems collapsed — so Yugoslavs began using a new currency tied to the German mark and Zimbabweans used a currency tied to the dollar. And the cycle of higher prices ended.

Steve H. Hanke, an economist at Johns Hopkins University and an authority on hyperinflation, said that in Iran’s case, limiting the amount of rials in circulation “would solve the biggest problem they have: inflation.”

NY Times

  • yazidi

    who want money with a devil face on it….its a bad luck

  • yazidi

    who want money with a devil face on it….its a bad luck

  • 5thDrawer

    ‘Quick, Hezzy. We need more of those Cedars. We’re running out of paper.’

  • 5thDrawer

    ‘Quick, Hezzy. We need more of those Cedars. We’re running out of paper.’

  • lebsyrian

    Persian spring coming soon?

    • wargame1

      Iran is a colonial empire within its own borders. Once the ability of Tehran to keep its fascist control is loosened millions of Azeris, Kurds, Ahwazi Arabs, Turkmen, and Baluchis will bolt for the exits. Iran will break apart like the Soviet Union. Afghan Mujaheddin are expert in this matter as they have previous experience in disintegrating the communist Russia. At the Moment the Majoosi brains are fried by their fanaticism and flying high with a plan to expand the empire which they call ” Shia Crescent” in the Arab countries. But due to heavy spending on weapons their economy is going down and this will result an inevitable revolt. it happened once already in 2011-12 but it was brutally suppressed.

      Iran is in fact asking for a beating. During Iraq and Afghan invasion it gives a direct support to the occupation force and it gained shia regime in both countries and then again they helped NATO in Libya to overthrow Gaddafi(one of their own who were not listening to them any more) 

      Now by aiding the occupation force Iranian regime has become a direct enemy of the sunni resistance. This enmity were there al along but the Majoosis were very clever to conceal it but the situation is turning in such a way that they cant hide it any more from the common people. The Syrian revolution exposed their true color. While shouting anti Israeli slogan they are active in killing the sunnis in Syria!! this is very puzzling for the common public!!

      So what can we expect ? Taliban is gaining ground and the occupation force is in great trouble with theit shia puppets. So at the end the occupation force will be forced to drop these puppets and then a new problem will arise. Iran Russia China North Korea India all are ready to protect the Majoosi puppet but the Europeans have had enough after spending trillions of dollars in order to install these shia puppets. 

      Here we will see a political drama soon. Suddenly Iran and its puppet will be more inclined towards Russia. We already start seeing the signs as Nuri Al Maliki is sighning big arms and oil exploration contracts with Russia. This will alarm Europe and then at the end we will see the same old treaty between Europe and Afghan Mujaheddin !!! and this time the Target is Iran ,India ,Russian regime.

      • Mahdi Kenaani

        i only read the first paragraph of your post because as usual its a bunch of nonesense nobody should waste time reading. 
        However, you’re mentioning something about that iran will fall apart due to many ethinic groups and i want you to know that you couldnt be more wrong bcos all iranians and by “all” I mean fucking ALL!!!! no matter if they are persians, azeri, lor, kurd or turk, they LOVE irANGEL. And for god sake dont forget about the arabs who fought against the idiot of sadam alongside all other iraniANGELS! what does this tell ya? THAT iraniANGEL PATRIOTISM IS EXCEPTIONAL. i have never ever met a people that loves their country as much as iraniANGELS. It happens that they hate their government and desire the western way of life but that doesnt mean they hate their country and want the west to start a war against irANGEL. Here is a piece of advice to you! DONT YOU EVER MAKE THAT MISTAKE TO UNDERESTIMATE THE iraniANGEL PATRIOTISM, it would backfire sooooo badly

  • lebsyrian

    Persian spring coming soon?

    • wargame1

      Iran is a colonial empire within its own borders. Once the ability of Tehran to keep its fascist control is loosened millions of Azeris, Kurds, Ahwazi Arabs, Turkmen, and Baluchis will bolt for the exits. Iran will break apart like the Soviet Union. Afghan Mujaheddin are expert in this matter as they have previous experience in disintegrating the communist Russia. At the Moment the Majoosi brains are fried by their fanaticism and flying high with a plan to expand the empire which they call ” Shia Crescent” in the Arab countries. But due to heavy spending on weapons their economy is going down and this will result an inevitable revolt. it happened once already in 2011-12 but it was brutally suppressed.

      Iran is in fact asking for a beating. During Iraq and Afghan invasion it gives a direct support to the occupation force and it gained shia regime in both countries and then again they helped NATO in Libya to overthrow Gaddafi(one of their own who were not listening to them any more) 

      Now by aiding the occupation force Iranian regime has become a direct enemy of the sunni resistance. This enmity were there al along but the Majoosis were very clever to conceal it but the situation is turning in such a way that they cant hide it any more from the common people. 

      So what can we expect ? Taliban is gaining ground and the occupation force is in great trouble with theit shia puppets. So at the end the occupation force will be forced to drop these puppets and then a new problem will arise. Iran Russia China North Korea India all are ready to protect the Majoosi puppet but the Europeans have had enough after spending trillions of dollars. 

      Here we will see a political drama soon. Suddenly Iran and its puppet will be more inclined towards Russia. We already start seeing the signs as Nuri Al Maliki is sighning big arms and oil exploration contracts with Russia. This will alarm Europe and then at the end we will see the same old treaty between Europe and Afghan Mujaheddin !!! and this time the Target is Iran ,India ,Russian regime.

      • Mahdi Kenaani

        i only read the first paragraph of your post because as usual its a bunch of nonesense nobody should waste time reading. 
        However, you’re mentioning something about that iran will fall apart due to many ethinic groups and i want you to know that you couldnt be more wrong bcos all iranians and by “all” I mean fucking ALL!!!! no matter if they are persians, azeri, lor, kurd or turk, they LOVE irANGEL. And for god sake dont forget about the arabs who fought against the idiot of sadam alongside all other iraniANGELS! what does this tell ya? THAT iraniANGEL PATRIOTISM IS EXCEPTIONAL. i have never ever met a people that loves their country as much as iraniANGELS. It happens that they hate their government and desire the western way of life but that doesnt mean they hate their country and want the west to start a war against irANGEL. Here is a piece of advice to you! DONT YOU EVER MAKE THAT MISTAKE TO UNDERESTIMATE THE iraniANGEL PATRIOTISM, it would backfire sooooo badly