A private bank in Iran, Ayandeh Bank, has officially closed after failing to manage its financial losses.
The bank’s downfall has impacted over 42 million account holders, whose assets are being handled by Bank Melli, a state-owned financial institution.
According to local news sources, Ayandeh Bank had built up nearly $5.1 billion in losses and was also burdened with around $3 billion in debt.
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The Central Bank of Iran (CBI) had attempted to help, but the efforts were unsuccessful. With no recovery plan working, the decision was made to shut down the bank, which had branches across the country.
To ease concerns, the CBI governor, Mohammad Reza Farzin, stated that customers would still be able to access their funds.
However, the incident draws attention to the risks of financial systems that depend on lending out deposits and operating with limited reserves. When such systems face losses, they often rely on government support to avoid collapse.
This event also brings attention to alternative financial systems. The original idea behind Bitcoin
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