What's Happening?
Syria is set to issue new banknotes by December, removing two zeros from its currency in an effort to restore public confidence in the severely devalued Syrian pound. This move comes after the pound's purchasing power collapsed to record lows following a prolonged conflict that ended with President Bashar Assad's ouster. The Central Bank Governor, Abdelkader Husrieh, confirmed the revaluation as a strategic pillar of fiscal and monetary reforms. The Syrian pound has lost more than 99% of its value since the war began in 2011, with the exchange rate now at around 10,000 pounds to the U.S. dollar, compared to 50 before the war. The revaluation aims to ease transactions and improve monetary stability, with the central bank informing private banks of the intended changes. Meetings on the currency overhaul have been chaired by Central Bank Deputy Governor Mukhlis al-Nazer, and Syria has agreed with Russian state-owned money printing firm Goznak to produce the new notes.
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Why It's Important?
The revaluation of the Syrian pound is significant as it marks a symbolic move away from Assad's rule, with plans to replace banknotes featuring Assad's image. This change is expected to strengthen the Syrian economy by improving monetary stability and easing daily transactions, which have become increasingly difficult due to the pound's depreciation. The move also signals a political shift, as Syria's new leaders pledge to create a free-market economy and lift restrictions to ease cash flow. However, there are concerns about a liquidity crunch in a country with limited infrastructure for digital payments. Issuing new notes would grant the government better oversight over the cash in circulation, addressing concerns over an estimated 40 trillion pounds circulating outside Syria's formal financial system.
What's Next?
Syria's central bank has instructed lenders to be ready for the rollout of the new currency by mid-October, with a 12-month coexistence period allowing both old and new notes to circulate until December 8. Officials plan an information campaign in the coming weeks before the formal launch of the new notes. The revaluation could confuse consumers, especially the elderly, and there is a lack of a clear regulatory framework or plan for full national implementation, given the gaps in the state's territorial control. Syria is set to hold its first elections to set up a new legislative assembly in September, which may impact the currency revaluation process.
Beyond the Headlines
Replacing banknotes featuring Assad's image carries symbolic weight, signaling a clear break from more than five decades of Assad rule. This move reflects a necessary political shift, as Syria transitions to a new leadership and economic model. However, the revaluation could pose challenges for consumers, particularly the elderly, who may struggle to adapt to the new currency. Additionally, the lack of a clear regulatory framework or plan for full national implementation could hinder the effectiveness of the revaluation, given the gaps in the state's territorial control.
