Ayandeh Bank Collapse Ignites Iran's Regime Crisis

WSJ Analysis: Austerity Budget Sparks Backlash
Cash Support and Price Controls Prove Ineffective

The Wall Street Journal (WSJ) analyzed on January 13 (local time) that the most distinct sign foretelling the current regime crisis in Iran was the collapse of Ayandeh Bank.

WSJ assessed that the downfall of Ayandeh Bank was not only a symbol of economic collapse, but also ultimately triggered anti-government protests, leading to the most severe political and social crisis in the Islamic Republic in over 50 years. Ayandeh Bank was liquidated in October last year after accumulating $5 billion (approximately 7.4 trillion won) in losses due to bad loans.

A video capture of anti-government protests held on the 9th in Tehran, the capital of Iran. Photo by AP Yonhap News

This crisis erupted at the worst possible time for Iran. The Iranian government’s credibility was already severely shaken after it was revealed during the so-called “12-Day War” in June last year, when Iran was attacked by Israel and the United States, that it lacked the ability to defend its own citizens. In addition, Iran’s refusal to make concessions in nuclear program negotiations lowered expectations for sanctions relief. In November last year, Israel and the United States once again threatened to strike over the nuclear issue, but Iran failed to provide a clear response.

WSJ conveyed economists’ views that Ayandeh Bank’s insolvency is one aspect of the financial system crisis that accelerated after the United States reinstated economic sanctions against Iran in 2018, and that this incident occurred at the very core of the crisis.

Adnan Mazarei, a financial expert who previously served as Deputy Director for the Middle East and Central Asia at the International Monetary Fund (IMF), stated, “Ayandeh Bank was closely connected to powerful figures in the regime,” and added, “The bank’s insolvency further deepened the loss of legitimacy that has plagued the Iranian regime, especially after Israel’s attacks.”

Economic indicators have also continued to deteriorate. In 2025, the value of the Iranian rial plummeted by 84% against the dollar, while food prices surged by 72%. Javad Salehi-Isfahani, an economist at Virginia Tech, estimated that capital flight from Iran last year amounted to between $10 billion (14.8 trillion won) and $20 billion (29.5 trillion won).

The Iranian government attempted an austerity stance in the budget submitted in December last year, but faced strong backlash. The government subsequently announced a plan to provide monthly support payments of 10 million rials (about 13,500 won) per person and warned of severe punishment for those who refused to comply with price controls, but the measures had only limited effect.

Currently, in Iran, hundreds of citizens are taking to the streets in Tehran demanding measures to stabilize livelihoods. Since protests intensified at the end of last year, they have spread to dozens of cities nationwide, and as the government has escalated its crackdown, hundreds of protesters have died over the past two weeks.