Syria is preparing to introduce new banknotes on December 8, following a decision to remove two zeros from the national currency, in an attempt to restore public confidence in the Syrian pound.
Reuters reported on Friday, August 22, citing seven informed sources and documents, that the Central Bank had informed private banks in August of its plan to issue a new currency.
Five commercial bankers, a Central Bank source, and a Syrian economic official said the Central Bank later notified them of the decision to remove two zeros. They spoke on condition of anonymity to discuss a decision not yet publicly announced.
Deputy Central Bank Governor Mokhles al-Nazer chaired the currency review meetings, according to commercial bankers who attended.
Two bankers and another Syrian source familiar with the matter said Syria had reached an agreement with Russia’s Goznak company (a state-owned firm specializing in printing money) to produce the new banknotes.
Neither the Syrian Central Bank nor the Russian company responded to Reuters inquiries about the new process.
Bank accounts and operations
Banking sources told Enab Baladi that since early July, the Central Bank has formed working groups with public banks to study the implications of removing two zeros on bank accounts.
The sources said these groups are reviewing the impact of the currency change on customer balances, programming of banking systems and databases, ATM deposit and withdrawal systems to align with the new denominations, and the re-issuance of bank cards.
Loan risks
The sources added that specialized teams from the Central Bank and public banks are reassessing existing loans (short, medium, and long-term), which will be re-priced under the new currency values without changing their actual worth or interest. They are also studying potential errors in repayment.
One of the key consequences of removing two zeros from the Syrian pound, the sources said, is the revaluation of assets and liabilities. This will require re-pricing fixed and current assets of financial institutions, affecting profits and financial solvency, and necessitating amendments to laws and decrees related to these institutions’ capital.
Financial records
Changing the local currency also entails adjusting invoicing systems, pricing mechanisms, accounting records, and annual and semi-monthly financial reports to match the new values. This requires comprehensive updates to avoid errors in commercial operations.
The working groups have studied the possibility of security vulnerabilities in banking systems and recommended training staff in the financial sector to handle Syria’s new financial framework.
A sovereign decision
Karam Shaar, director of the Syrian program at the Observatory of Political and Economic Networks and an economic expert, told Enab Baladi earlier that changing the Syrian currency’s denomination is a fully sovereign decision issued by the Central Bank.
Shaar explained that a common misconception is that when a state changes its currency, it must hold reserves of foreign currency or gold. He noted that this requirement ended worldwide in the 1970s.
Another misconception, he added, is that printing money must be done under the supervision of the International Monetary Fund or the World Bank, whereas in reality it is a sovereign decision.
He stressed that as long as the new banknotes are printed to meet global standards and cannot be easily counterfeited, no international body is required to verify them, as this is entirely under the state’s jurisdiction.
Shaar noted that the decision currently lies with the caretaker government, adding that the more urgent measure at this stage is to prevent the circulation of foreign currencies such as the Turkish lira and to rely mainly on the Syrian pound in domestic transactions.
According to the researcher, prioritizing the Syrian pound will improve its stability against foreign currencies, since the use of multiple currencies in different regions contributes to instability and waste.
Syria to issue new banknotes, remove two zeros from Syrian pound on anniversary of Assad’s fall Enab Baladi.
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