ASSESSMENTS

Iran's Frail Banking Sector Poses a Threat From Within

Jun 14, 2019 | 09:00 GMT

This picture shows Iranian President Hassan Rouhani speaking to the Central Bank of Iran.

Iranian President Hassan Rouhani delivers a speech during a visit to the Central Bank of Iran in Tehran on Feb. 26, 2019.

(Iranian Presidency/Handout/Anadolu Agency/Getty Images)

Highlights

Since the 1979 Islamic Revolution, Iran's banking sector has languished as Tehran has politicized its central bank and monetary policy far more than almost any other country in the world.
U.S. sanctions are putting tremendous pressure on Iran's extremely fragile financial system by sending Iran into a period of stagnant economic growth accompanied by high inflation.
President Hassan Rouhani has pushed to reform the banking sector and address its systemic issues, but the country's current economic crisis has short-circuited his efforts.
The continual need to solve short-term economic crises over the years has delayed banking reforms. Tehran, however, has reached the point of needing to address the sector's problems or risk its collapse.

As the U.S. "maximum pressure" campaign continues to hammer his country's economy, Iranian Foreign Minister Javad Zarif recently offered a message of defiance, saying Iran would weather the storm, given its "PhD in sanctions-busting." His rhetorical description of the Islamic republic's resilience in the face of outside pressure is certainly apt, given its track record of survival. But this time around, the current U.S. pressure campaign poses a risk to one of the fundamental pillars of Iran's economy: its increasingly fragile banking and financial sector. ...

Keep Reading

Proceed to sign up

Already have an account?