Executive Summary
The report analyses the immediate economic and geopolitical effects of current events in Iran, encompassing the private sector’s formal appeal to President Masoud Pezeshkian for urgent currency and regulatory reform amid a “neither war nor peace” climate, alongside a significant strengthening of Central Bank actions against rial-based stablecoin channels.
The objective is to provide decision-relevant facts and analysis to inform policy options that mitigate capital flight, restore market confidence and preserve productive capacity.
Key Findings
- Private sector leaders warn that prolonged political and external tension has shifted the operating environment from calculable risk to pervasive uncertainty, threatening investment and production.
- Central Bank interventions (closure of rial crypto gateways and daily price caps) aim to curb capital flight but risk displacing transactions onto unregulated venues, exacerbating systemic opacity.
- Immediate policy priorities are convergent: stabilise the exchange rate architecture, rationalise foreign-exchange allocation (including “imports without currency transfer”), and re-embed the private sector in formal FX market mechanisms.
Scenario context
Iran is facing a complex and volatile economic environment marked by high inflation, currency depreciation, and structural uncertainty. The rial lost approximately 37% of its value against the US dollar in 2024, leading to capital flight, widespread dollarisation, and growing reliance on informal financial channels such as stablecoins. The Central Bank of Iran (CBI) responded by tightening monetary controls, closing rial-based crypto gateways, and imposing price caps on digital assets in an attempt to stabilise the currency and limit speculative outflows.
These measures were introduced against a broader backdrop of political and geopolitical instability. While Iran is not formally engaged in war, it remains trapped in a condition described by both private sector representatives and political leaders as “neither war nor peace”. This suspended state—driven by international sanctions, regional tensions, and uncertainty over future diplomatic or military developments—has paralysed long-term business planning and investment.
The pivotal event illustrating this tension was a meeting between President Masoud Pezeshkian and Iran’s private sector representatives on October 6, 2025. During this session, business leaders warned that the economy had shifted from a climate of “risk-taking” to one of “complete uncertainty”, threatening the very foundation of the country’s productive sector.
They called for a comprehensive review of monetary and exchange rate policies, gradual unification of Iran’s multiple exchange rates, reform of the “imports without currency transfer” mechanism, and the preservation of the private sector’s role in the foreign exchange market. In parallel, the CBI announced the formation of a joint working group with the Chamber of Commerce to identify structural obstacles in currency and credit allocation, signalling tentative cooperation between the government and private stakeholders.
Risk Analysis
Macroeconomic stability and monetary sovereignty
Iran’s Central Bank actions are motivated by two simultaneous imperatives: stem capital flight and preserve nominal control over the rial. Closing rial-to-crypto gateways and capping digital-asset pricing are blunt instruments that can reduce immediate foreign exchange (FX) outflows through formal channels. However, such measures create strong incentives for market participants to migrate to peer-to-peer and offshore venues.
The resulting fragmentation raises the probability of a two-tier system: tightened onshore controls and a larger, less transparent offshore market, which will complicate monetary policy transmission and weaken the state’s ability to measure and manage aggregate currency demand.
Financial repression versus market confidence
Short-term financial repression can be effective in buying temporal breathing room for the authorities, but if prolonged it inflicts collateral damage on the banking system, credit intermediation and the investment climate.
The private sector’s demand for a credible, gradual path to a unified exchange rate reflects the recognition that multiple official and parallel rates create rent opportunities, encourage corruption and deter long-term capital allocation. A credible, sequenced unification plan—underpinned by clear institutional rules and compensatory macro-anchors (e.g. fiscal consolidation, targeted FX auctions, reserves management)—is necessary to reduce the premium on stablecoins and non-bank FX channels.
SMEs, production and social stability
SMEs’ predominance in employment (c. 90%) and material consumption (c. 30% of energy) makes them uniquely vulnerable to FX rationing, disrupted import of inputs, and rising financing costs.
Policies that restrict access to FX without compensatory domestic liquidity facilities (credit lines, tax credits, conditional rial support) risk widespread business failure and job losses, which would elevate social and political stress in a fragile “neither war nor peace” environment.
Geopolitical alignment and sanctions circumvention risks
Pressure from sanctions and restricted access to global financial rails incentivises Tehran to explore alternative arrangements (non-dollar settlements, barter, regional currency swaps). The reported proposal for a gold-backed stablecoin partnership with Russia (often referred to as the “Token of the Persian Gulf”), if pursued, would be a strategic attempt to bypass Western sanctions and re-anchor cross-border payments.
Policy credibility and governance reforms
The private sector’s call for reduced state competition, streamlined customs/ports and clearer, stable rules (including a proposed three-year “Economic Stability Charter”) highlights a governance deficit: episodic, ad-hoc interventions undermine predictability.
Institutional reforms—consolidation of overlapping laws, transparent FX allocation rules, and formalised public-private consultative mechanisms (eg. an ongoing advisory council with real-time market feedback)—would lower policy uncertainty and reduce the attractiveness of shadow FX solutions.
Systemic risk and financial integrity
Aggressive restrictions on crypto and stablecoin channels may meet financial integrity objectives (AML/CFT) and placate political demands to control capital flight, but without parallel expansion of accessible formal FX avenues for households and firms, enforcement will be partial and displacement effects will proliferate.
Regulators should expect higher monitoring costs, gating problems at customs and pressure on foreign-trade logistics, all of which impede recovery in the near to medium term.
Operational recommendations (implementation-oriented)
- Announce a time-bound, phased unification strategy for the exchange rate with clear milestones and contingency rules; link progress to reserve and fiscal metrics.
- Rapidly expand formal FX supply to priority productive sectors (machinery, raw materials, export-oriented industries) via targeted lines and transparent tenders to reduce recourse to crypto.
- Establish a standing technical secretariat (CBI + Chamber + Ministry of Economy) to monitor shadow FX activity and produce weekly market intelligence to inform calibrated interventions.
- Publicly commit to reduce administrative overlap (begin legislative consolidation) and to a three-year stability charter to rebuild private-sector confidence.
- Treat any proposals for alternative monetary instruments (eg. gold-backed stablecoins) as strategic diplomatic initiatives requiring cross-agency mandate, external legal review and multi-source verification before operational deployment.
Conclusion
Iran currently confronts a twin problem of acute monetary pressure and chronic policy uncertainty. The Central Bank’s anti-stablecoin measures and the private sector’s demand for structural and FX reform are two facets of the same macroeconomic challenge: how to retain monetary sovereignty while avoiding fragmentation of markets into shadow venues that undermine policy effectiveness.
A calibrated package combining credible, time-bound FX unification, targeted liquidity for productive activity, enhanced public-private coordination and governance reforms offers the most realistic pathway to restore market functioning and reduce systemic risk.
