The labor market is one of the fundamental pillars of any country’s economy, and its fluctuations can have significant effects on economic policies, particularly monetary policies and the composition of central bank assets. This study examines the dynamic role of labor market variables in adjusting the optimal composition of the Central Bank of Iran’s assets. The primary objective is to analyze how changes in wage levels and employment affect the central bank’s asset portfolio and to formulate appropriate policies for optimal asset management. Previous studies have demonstrated that fluctuations in labor market variables, such as wage levels and employment rates, influence liquidity, interest rates, and money demand, ultimately reshaping the composition of central bank assets. In this context, the present study employs an optimal control model and the Particle Swarm Optimization (PSO) algorithm to investigate these dynamics.
 
Aim and Introduction
The labor market is one of the fundamental pillars of any country’s economy, and its fluctuations can significantly affect economic policies, particularly monetary policies and the composition of central bank assets. This study examines the dynamic role of labor market variables in determining the optimal composition of the Central Bank of Iran’s assets. The primary objective is to analyze how changes in wage levels and employment affect the central bank’s asset portfolio and to formulate appropriate policies for optimal asset management.
Previous studies have demonstrated that fluctuations in labor market variables—such as wage levels and employment rates—affect liquidity, interest rates, and money demand, which in turn reshape the composition of central bank assets. To address this, the present study employs an optimal control model and the Particle Swarm Optimization (PSO) algorithm to explore how labor market dynamics influence asset allocation decisions at the central bank level.
 
Methodology
To analyze the impact of labor market variables on the composition of the Central Bank of Iran’s assets, economic data from 1971 to 2023 were collected. The primary sources of the dataset are the Central Bank of the Islamic Republic of Iran (CBI) and the Statistical Center of Iran (SCI), supplemented by the International Monetary Fund (IMF) International Financial Statistics for missing observations.The dataset includes information on wage levels, employment rates, liquidity, interest rates, inflation rates, the composition of central bank assets, and other macroeconomic indicators. The research methodology is based on the optimal control model and the PSO algorithm, implemented in the Python (Spyder) environment. In this model, labor market variables are considered within a range from 0.5 (representing severe contractionary changes) to 1.5 (indicating severe expansionary changes). This range captures the effects of various labor market policies on the optimal composition of central bank assets. Additionally, a sensitivity analysis was conducted to examine how different labor market fluctuations affect asset composition.
 
Findings
The results indicate that fluctuations in wage levels and employment have differential effects on the composition of the central bank’s assets. During periods of significant wage increases, money demand rises, leading to greater liquidity growth and intensified consumer spending. Consequently, the central bank increases the share of debt securities to control inflation and raises the proportion of euros and gold in its asset portfolio to diversify foreign exchange reserves.
Conversely, during periods of declining wage levels, the central bank tends to hold more stable assets, such as the U.S. dollar (USD) and the Swiss franc (CHF), reflecting heightened economic uncertainty and reduced risk appetite.
The analysis of employment variations also reveals that an improved labor market increases money demand, prompting the central bank to issue more debt securities to control liquidity. Under such conditions, the shares of euros, yuan (CNY), and debt securities in the central bank’s asset composition rise, while the need to hold stable assets such as gold diminishes. In contrast, during periods of declining employment, the central bank exhibits a greater preference for low-risk assets, increasing the shares of USD, CHF, and gold. This trend reflects a growing demand for safe-haven assets and declining confidence in financial markets.
Another key finding is that wage increases heighten the likelihood of greater liquidity and inflation, resulting in an increased share of gold and debt securities in the central bank’s portfolio. Conversely, during economic recessions and wage declines, the demand for stable currencies such as the USD and Japanese yen (JPY) increases, compelling the central bank to issue additional debt securities to control liquidity and manage inflation. Economic sanctions also play a crucial role in shaping the central bank’s asset composition. Due to economic constraints and sanctions, Iran has faced difficulties accessing foreign currencies. As a result, the central bank has tended to increase the shares of gold and CNY in its asset portfolio to mitigate the adverse effects of foreign exchange market fluctuations.
 
Conclusion and Recommendations
The findings of this study demonstrate that labor market fluctuations exert a dynamic influence on the composition of the Central Bank of Iran’s assets. During periods of economic prosperity, rising employment, and higher wages, the central bank tends to invest more in financial instruments and foreign currencies. In contrast, during economic downturns and declining employment, the central bank adopts more conservative policies, prioritizing stable assets such as gold and strong currencies.
Based on these findings, it is recommended that the Central Bank of Iran adopt a dynamic and flexible approach to managing its asset portfolio. During economic expansions, increasing the issuance of debt securities and utilizing diverse financial instruments can help control liquidity and curb inflation. Conversely, during recessions, increasing the share of safe reserves and reducing reliance on debt instruments can mitigate financial risks and maintain economic stability.
Furthermore, coordination between labor market policies and monetary policies can play a significant role in optimizing the central bank’s asset composition, ensuring that wage and employment fluctuations are directly incorporated into policy decision-making. Finally, leveraging modern financial instruments and diversifying foreign exchange reserves can reduce dependency on specific assets and enhance flexibility in responding to economic shocks. Given Iran’s economic structure and challenges—such as inflation, sanctions, and labor market volatility—developing a comprehensive and adaptive strategy for managing the central bank’s asset composition is essential