According to the International Iranian Stone Exhibition, the high growth of liquidity in the Iranian economy occurs mainly due to two reasons: "government borrowing from the central bank" and "banking network borrowing from the central bank." In order to prevent government borrowing from the central bank in the long run, tax revenues must be relied on, and in the short term, the government deficit must be compensated by printing government bonds as well as generating government assets, and government borrowing from the central bank must be stopped.

However, in order to prevent the banking network from accessing the central bank's resources, it is necessary to strengthen banking supervision and deal with delinquent banks. For this reason, in many countries with advanced financial systems, in addition to the existence of advanced tax systems, special attention has been paid to the issue of banking supervision, so that the study of international experience indicates the existence of a detailed literature on this issue. In addition to strengthening the banking supervisor, all developed countries have used public and public oversight mechanisms to control the risky behaviors of the banking network.

In this report, we will answer the question of what is the importance of public supervision of the banking network and what are the current problems of public supervision of the banking network in Iran?

* Why is public oversight of the banking network important?

The issue of public oversight and transparency of the banking network in all developed countries is important. In addition to the national rules on information disclosure, the Basel II Document, the most important international banking supervision document, explicitly emphasizes the need for information disclosure in order to enable market participants to be monitored. Specifically, the third pillar (Pillar III) of the Basel Document provides two general frameworks for banking information disclosure requirements. These requirements include the periods of disclosure of information, the information items that need to be published, and how some important indicators are calculated.

Disclosure of banking information helps depositors and shareholders become aware of their bank's risk position. Awareness of money and capital market participants about the bank's risk situation causes capital to move from bad banks to good banks and bad bank's share of the market to decrease continuously. In certain cases, this can lead to the liquidation of the bad bank and the complete withdrawal of high-risk players from the market. In addition to enhancing the regulatory role of market participants, transparency will also enhance the regulatory role of the media and economic analysts. If the information is published in a timely, complete and quality manner, macroeconomic analysts as well as journalists will transfer the risks in the banking system to public opinion, public attention to one issue will cause the banking supervisor to be held accountable and Risks formed in the banking system should be resolved quickly.

* Problems of public supervision of the banking network in Iran

Disclosure of banking network information became mandatory for all private banks in Iran in 1394 with the announcement of the section "Criteria governing the minimum standards of transparency and public disclosure of information by credit institutions". In another circular in 1396, the Central Bank also obliged state-owned banks to disclose information. Despite setting out the significant tasks in the said circular and also considering the guarantee of proper implementation, the disclosure of banks' information is currently facing challenges. The following are some of the most important problems in disclosing banking information in Iran:

Non-disclosure of information by state-owned banks: Despite the fact that in 1396, all state-owned banks were obliged to disclose their important information, but so far, after three years, none of the state-owned banks have acted in accordance with the regulations.

Information Delay: Private banks have four months to disclose their financial statements, along with some important information. But a review of the timing of the release of banks' financial statements shows that some banks have issued their financial statements with a two-year delay from the legal deadline.

Defects in published information items: One of the most important problems of transparency in the country's banking system is the banks' failure to comply with all information disclosure duties. For example, some banks refuse to publish the list of facilities and large liabilities, facilities to related parties and some important bank ratios.

Low quality of information presentation method: In addition to the mentioned shortcomings, the presentation method of information by banks also has some drawbacks. For example, some of the information published by banks is in the form of photos, which eliminates the possibility of search. Also, none of the banks provide their information in the form of analyzable data in the standard database. The current way of presenting information has deprived analysts and journalists of the possibility of analysis.

* Central bank tools to deal with violations of the banking system

In general, since the risky behavior of banks causes inflation and waste of public rights, it is necessary to establish public oversight of the performance of commercial banks. Public oversight will reduce corruption in the banking system and reduce liquidity growth in the economy. So far, the central bank, as a banking supervisor, has tried to provide the legal infrastructure for public oversight by issuing two sub-letters, but in practice this has not been achieved as the policymaker had predicted. For this reason, it is necessary to review the case of the managers of the violating banks in the field of disclosure of information in the disciplinary board of the banks and to dismiss the violating managers of the banks, based on the performance guarantee seen in the mentioned sections.