Excellent and complex questions that get to the heart of Iran's political economy. The situation is a paradox of severe public economic distress alongside significant elite resilience. Here’s a breakdown of what is known and analyzed by experts.

1. How the Elite Finance Their Activities: A Multi-Tiered System

The Iranian elite is not monolithic; it consists of overlapping networks: the Revolutionary Guards (IRGC), religious foundations (Bonyads), state-owned enterprises, and well-connected private "khodro" (crony) capitalists. Their financing mechanisms are largely insulated from the formal banking sector's problems.

• Control of Hard Currency (Forex) Rents: This is the most critical mechanism. The state is the primary source of foreign currency through oil/gas exports and, to a lesser extent, other trade. The government sells dollars/rials at multiple official exchange rates (a system of subsidized forex) significantly lower than the soaring free-market rate. Access to this cheap forex is a massive privilege. Elite-controlled companies can import goods (medicine, food, machinery) at the official rate, then sell them at prices benchmarked to the free-market rate, pocketing the difference. This is a primary source of wealth accumulation.
• Dominance of the "Parallel Economy": Entities like the IRGC's Khatam al-Anbiya conglomerate and massive Bonyads (e.g., Setad, Astan Quds Razavi) control vast swaths of the economy—construction, mining, finance, manufacturing—often awarded no-bid contracts. They operate as quasi-state entities with their own financial circuits, often bypassing the troubled banking sector.
• Smuggling and Sanctions Evasion Networks: Sanctions have created a lucrative shadow economy. Elite networks with ties to the state security apparatus control key smuggling routes (for everything from fuel to consumer electronics) and sophisticated sanctions-evasion schemes for oil sales. This generates billions in hard currency outside state control.
• Wealth Held in Foreign Assets: Yes, a significant portion of elite wealth is held outside Iran and in foreign currencies. This includes real estate in Dubai, Turkey, Canada, and Europe; bank accounts in Asia and the Gulf; and investments in foreign companies. This externalizes their wealth, protecting it from devaluation and providing liquidity abroad.

2. Wealth in Foreign Currencies vs. Rials

Absolutely. For both the elite and the general public, the Iranian Rial is seen as a declining store of value.

• For the Elite: As above, their operational capital and stored wealth are heavily dollarized or euroized. They convert rials from domestic operations into hard currency as quickly as possible, often moving it abroad. Their liquidity for international transactions comes from these foreign holdings.
• For the Public: Those who can save do so in gold coins, foreign currency (especially US dollars), and stable cryptocurrencies. The rial is primarily used for daily transactions, not savings. This widespread "dollarization" of the economy undermines monetary policy and perpetuates inflation.

3. The Effect of This Finance Management on the National Economy

The elite's insulated, rent-seeking system is a primary driver of Iran's economic crises, not just a consequence of sanctions.

• Hyperinflation Driver: The multi-tiered exchange rate system and the massive injection of liquidity (printed rials) to cover budget deficits—often to fund elite-controlled projects—are direct causes of inflation. The gap between official and free-market rates creates huge arbitrage opportunities that distort the entire price system.
• Crippling Productive Investment: Capital is allocated not to the most efficient enterprises, but to the most politically connected. This misallocation of resources stifles productive private sector growth, kills competition, and leads to chronic low productivity.
• Deepening Inequality and Corruption: The system creates staggering inequality between the connected elite and the general public. It is inherently corrupt, as wealth comes from access to state rents, not innovation or efficiency. This erodes public trust and fuels social unrest.
• Undermining the Banking System: The formal banking sector is caught in the middle. It is forced to lend to insolvent state and semi-state enterprises at negative real interest rates (due to inflation), leading to the massive non-performing loans (NPLs) you mentioned. This makes banks dysfunctional for normal commerce and household needs.
• "Dutch Disease" & De-Industrialization: The focus on extracting forex rents from oil and import monopolies has hollowed out non-oil exports and competitive manufacturing, a classic economic distortion.

Summary: The Dual Economy

Iran effectively has a dual economy:

1. The Official/Public Economy: Characterized by a collapsing rial, soaring inflation (officially ~40-50%, widely believed to be higher), bank defaults, stagnant wages, high unemployment, and severe pressure on the middle and lower classes.
2. The Elite/Parallel Economy: Characterized by access to subsidized forex, control of strategic sectors, lucrative smuggling and sanctions-busting networks, and wealth stored in offshore assets. This sector remains highly liquid and profitable, insulated from the national currency's collapse.

In conclusion: The elite finance their activities through a protected system of state rents and parallel economies, not through the formal banking sector. Their wealth is absolutely held in foreign currencies and assets, which is how they remain liquid and protected. However, their very method of wealth accumulation is a primary cause of the national economic catastrophe, creating a vicious cycle where the public suffers while the connected elite finds ways to prosper. Sanctions have intensified this dynamic but did not create it; they exacerbated a pre-existing system of patronage and rentier capitalism.