Analysis of challenges and banking system solutions aimed at supporting vulnerable groups in facing the economic consequences of war and pandemics
During times of crisis and adversity, such as war and social unrest, a country’s economic infrastructure is severely affected. In these periods, banking system as the heartbeat of the financial system, face unexpected challenges that can lead to imbalance and vulnerability. Sudden changes in customer behavior and increased credit risk sharply heighten the need for immediate and appropriate financial measures. In such circumstances, focusing on supporting the most vulnerable groups and strengthening banks’ capacity to cope with economic consequences is essential for maintaining economic and social stability.
Legal Framework for Banking Support in Wartime under Banking Regulation
The banking system plays a critical role in maintaining economic stability during crises such as war or pandemics. Legal frameworks, including the General Policies of a Resistant Economy (2013) and the New Central Bank Law (2023), provide mechanisms for transparency, supervision, and targeted support. Key measures include long-term credit lines, performance reporting, transaction monitoring, and support for vulnerable households and businesses. Lessons from the COVID-19 pandemic, such as loan deferments and special facilities, offer a roadmap for mitigating wartime economic impacts and sustaining trust in the banking system.
Challenges and Strategies of the Banking System in Crises
The banking system faces tension between stability and emergency lending during crises like war or pandemics. Short-term strategies include special crisis regulations, Article 47 credit lines, and flexible repayment schemes. Medium-term measures involve targeted loan deferments, penalties management, and support for households and businesses, aiming to reduce non-performing loans and protect banks from financial losses.
This study is conducted at Monetary and Banking Research Institute in collaboration with Ali Allahyari and Zahra Khoshnoud in 2025.
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