Ayandeh had attracted deposits from millions of ordinary Iranians by offering unusually high interest rates, creating what one Iranian oversight official allegedly described as a “Ponzi scheme.”

I find it interesting why such a commercial bank was allowed to operate by the regulators. The WSJ article says it was giving bad loans to cronies, so that was definitely the government’s fault. But the bank’s collapse alone doesn’t explain why there was a run out of the rial. It’s easy to blame the collapse of the bank for the collapse of the rial, but I think it’s mostly mainstream economic propaganda. Also, backstopping is literally what all the Western central banks and treasuries did in 2008 and again in 2023, because the banks gave too many loans or held assets which were illiquid, with no inflation, in fact deflation as demand collapsed in 2008. So clearly, it’s not as simple as backstopping deposits.

I think it could be said that the dual exchange rate system where the central bank offered preferential rates to certain sectors, and rent seekers too, made it much worse, since the official rate was much more rigid, undervalued because the central bank used reserves to maintain it, certain connected people may have used it to run to dollars while the state lost reserves. When it ran out, a massive devaluation was inevitable.

Also, he doesn’t talk about the mechanics of how he created a dollar shortage. Did they try going after foreign banks Iran worked with, like in Iraq? I think the government is at least partly to blame, but this wouldn’t have happened if Iran weren’t sanctioned.