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REPLACEMENT OF THE SYRIAN POUND WITH A MORE STABLE CURRENCY

REPLACEMENT OF THE SYRIAN POUND WITH A MORE STABLE CURRENCY

REPLACEMENT OF THE SYRIAN POUND WITH A MORE STABLE CURRENCY
Syrian Economic Forum - 2015-07-10

Prepared by: Dr. Abdullah Hammadeh

Recently, many have been talking about the replacement of the Syrian currency with another currency in the liberated areas, especially in northern Syria. We have received many questions and inquiries about the consequences of this step, as many who are interested in this issue have visited us asking to prepare a study on the subject; what are the positive aspects of such step? What are its future implications on the Syrian economy? What are the steps to be followed for the replacement of the currency?

We, in the Syrian Economic Forum, we reaffirm that we have prepared this study professionally and without holding any responsibility of the consequences of this, if it is not applied and managed in a scientific and professional methods.

First - Triggers of replacement:

The Syrian pound is in great danger after losing all stability factors, especially after the depletion of foreign exchange reserves of the Central Bank of Syria, the disruption in the wheel of production in Syria, and the issuance of new cash from the category of the 1000 pounds without cover, to finance Assad regime after failing to pay the salaries of employees, workers, shabiha and its loyalists to continue to gain their loyalty.

If Syrian people in the liberated areas stopped dealing in Syrian pounds and replace it with another more stable currency, such as the Turkish lira or US Dollar, this will lead to a sharp and rapid collapse in the value of the Syrian pound and will even terminate its value. This could be the most dangerous gate to eliminate Assad regime’s economy.

Going from here, we see that the interest of the Syrian people is to stop losses incurred as a result of the deterioration of the value of the Syrian pound, and also stop supporting Assad regime by obtaining foreign exchange in exchange for the Syrian pound in the liberated areas through a network of agents who buy US dollar and hand over to the areas of the regime’s control (both intentionally or unintentionally).

Second – The proposal of an alternative currency:

Depending on one single currency only means linking the economy of liberated areas to economy of the country’s currency and any deterioration in the economy of this country will reflect negatively on the economy of liberated areas. Therefore, we believe it is better to adopt more than one stable currency in the liberated areas, such as the US Dollar and the Turkish lira. US Dollar can be used for major operations because it is more stable and is more widespread and accepted in the world, while the lira Turkish can be used for daily operations, especially that Turkey has great borders with the liberated areas, and that most of the material in the liberated areas are imported from Turkey, in addition to the availability of small suitable categories for the level of prices in the liberated areas.

Third – Steps to replace Syrian currency in the liberated areas with a more stable currency:

  1. Activate the role of the Ministry of Finance in the Syrian Interim Government inside Syria through finance directorates in the liberated areas, to take its role in the process of replacing the Syrian pound.
  2. Ask all supporting organizations to deliver the donated amounts of cash in Turkish lira instead of the US Dollar, in addition to also pay the salaries of employees of organizations inside and outside Syria in Turkish lira.
  3. Ask the Syrian Interim Government to pay salaries and any cash assistance to directorates within Syria in Turkish lira.
  4. Determine the target areas for the replacement of the currency (Aleppo, Idlib, Hama, Lattakia countryside).
  5. Launch awareness campaign to warn the Syrian people, especially in the target areas, form the negative effects of using the Syrian pound (and the deterioration of its value) in their dealings and the resulting daily losses, as Assad regime takes advantage of these transactions and receives foreign currency (US dollar) in exchange for the Syrian pound posed without cover.
  6. Media awareness campaigns through: Shari’a committees, imams of mosques, local entities and organizations, educational meetings, workshops, and others.
  7. The issuance of decisions by Shari’a committees, local councils and decision-makers in those areas to stop dealing in Syrian pounds and start dealing in Turkish lira.
  8. Adopt a new network of exchange centers to provide the Turkish lira in all categories, especially small ones, to meet the market needs in the targeted areas and accomplish daily financial transactions.
  9. Withdraw Syrian pound through accredited exchange centers within rules and restrictions, and only from those who are paid their salaries in Syrian pounds from Assad regime or who have previous financial dues and managed to get paid at this time. In such cases, exchange centers will hand them over the corresponding amounts in Turkish lira.
  10. Collect the amounts received in the Syrian pound in one center and send them to the rest of the liberated areas in Syria, particularly the besieged areas, through donors as a support rather than foreign currencies.
  11. We recommend the Syrian people to do the following:
  12. Savings should be in US dollars or gold, if available.
  13. Major transactions should be done in US dollar because it is more stable than the Turkish lira.

iii. Daily and small transactions should be done in Turkish lira.

Finally, this replacement process is temporary until the Syrian people succeeds in its revolution. We can go back to dealing in Syrian pounds after it stabilizes or after the instrument of a new currency of the liberated Syrian State. The first step to return Turkish currency to Turkey is to collect Turkish lira in the approved centers, and import all the people's needs it from Turkey with this money.

We emphasize again that this step carries with it many positive and negative consequences, so we recommend that these steps need to be applied thoughtfully and thoroughly.