The Bank Collapse That Sent Iran Into a Tailspin

Late last year, Ayandeh Bank, run by regime cronies and saddled with nearly $5 billion in losses on a pile of bad loans, went bust.

The bank’s collapse made clear that the Iranian financial system, under strain from years of sanctions, bad lending and reliance on inflationary printed money, had become increasingly insolvent and illiquid. 

Five other banks are thought to be similarly weak.

Ayandeh offered the highest interest rates of any Iranian bank, attracting millions of depositors and borrowing heavily from the central bank. The country’s beleaguered currency, the rial, tipped into a new downward spiral the country had little ability to stop. 

U.S. enforcement actions had cut Iran off from its crucial flow of dollars from Iraq, significantly reduced its hard currency earnings from oil sales and put its overseas reserves of foreign exchange out of reach with sanctions.

“If they could spend their way out of it they would have done that before, and they wouldn’t have had to resort to this kind of violence,” said Erik Meyersson, the chief emerging markets strategist at the Swedish bank SEB. 

Wall Street Journal 13 January 2026

https://www.wsj.com/world/middle-east/bank-collapse-iran-protests-83f6b681