Jared Malsin

— Iran is facing a kind of revolutionary situation.

This is the most significant challenge that the regime in Iran has faced since it came into existence after its last revolution in 1979.

There have been enormous protests throughout the country, and there's been a very severe crackdown in which hundreds, if not thousands, of people appear to have been killed in the last few days.

And you're seeing a very real risk that the regime could fall out of power.

And everyone is holding their breath to see what's going to happen next.

Iran has obviously been under international U.S.-led sanctions for many years, which means its economy is under severe strain.

That totally isolates Iran, cuts off the banking system from the rest of the world, and has put it in this very unstable situation to begin with.

One of the largest banks in Iran collapsed.

And that was a warning sign that the entire financial system was in crisis.

That cut off Iran from the world financial system and made it this kind of closed system almost, where it was very, very isolated, and it put its financial system under a lot of strain.

— For example, it is cut off from the SWIFT payment system.

The central bank is under sanctions.

Several other Iranian banks are under sanctions.

So this is a country that cannot borrow internationally.

It cannot do trade normally.

It cannot sell its oil freely.

And it is deeply, deeply isolated.

And that created a situation where you have the central bank propping up this entire system.

Something like 70% of Iran's banks were government-controlled to some degree.

That's according to an analysis by a former IMF official that I spoke to by 2019, which is when things started to come apart at the seams.