He will be replaced by the bank's general secretary Mahmoud Bahmani, according to Fars, a semi-official government news agency.

Mazaheri only became governor in September 2007 when his predecessor Ebrahim Sheybani resigned.

In mid-September, Mazaheri changed the rules on deposits so that banks could pay interest at more than the rate of inflation. Savers had been avoiding banks because negative real interest rates on deposits were eroding the value of their savings (MEED 16:9:08).

Mazaheri's initiative was the first serious banking reform in response to Iran's spiralling rate of inflation, which reached 27.6 per cent for the 12 months to the end of 21 August.