Controversy has recently returned in Syria over the possibility of introducing a new monetary category, amid divergent views on how this might affect the country’s “fundamentally deteriorating” economic reality.
The economist Amer Shahda said to Hashtag that the key to this is the ability to achieve stability, at the general level of prices and high economic rates.
This could be done by central bank strategies, either by introducing a new monetary category or by deleting zeros from the currency.
This is also linked to the topic of improving the economy and stemming inflation, through the application of such strategies, or resorting to a complete change of the monetary system, according to Shahda.
Officials at the Central Bank of Syria had confirmed that there was no intention to introduce the 10,000 lire category, either in the short or long term, according to “Al Khobar TV”.
Salem Al-Junaidi, head of the Bank’s Exchange Rates and Studies Department, stated that the Bank resorts to this based on the need for trading and economic changes.
In turn, Jumana Al Khaja, head of the Bank’s Economic Research Department, considered that printing large monetary categories does not affect inflation, but its impact will be psychological on citizens.
The new monetary system
The economic researcher Amer Shahda considered that the monetary system in Syria was good but became bad, as a result of inflation, high prices, and lack of control over the money supply.
Shahda pointed out that economic and social changes are reflected in the monetary system, turning from good to bad, which prompts the state to abandon it and seek a system that suits these conditions.
Shahda stated that the central bank should make the new monetary system responsive to internal and external variables flexibly, which would be found in the money supply.
“This requires the freedom of individuals to keep the currency in circulation, provided that there is unimpeded freedom to withdraw and deposit such money, in the presence of the voluntary monetary system,” He said.
Application of the monetary system
The banking expert pointed out that it was not possible to pursue a policy aimed at achieving part of the objectives of the monetary system, and that it was not possible to issue new categories and talk about curbing inflation at the same time.
He pointed out that this required the fundamental characteristics of effective cash management, which lay in the extent to which the centralized market could manage money.
He said that the central bank plays a major role in the success of the monetary system, and according to its ability to control the money supply, it achieves positives at the cash price and maintains its purchasing power.
He explained that the amount of money offered was controlled by absorbing that block or pumping another block, in order to stabilize the price level and achieve high rates of economic growth.
Escape from money
Witnesses argued that the lack of capacity to stabilize the overall price level indicated an economic downturn, leading to price increases and successive inflationary increases affecting the value of money.
“In this case, the society resorts to replacing money whose purchasing value deteriorates, with goods whose prices are expected to rise, in a phenomenon that is called” escaping money,” Shahda added.
He explained that people lost confidence in the monetary system, started buying gold and real estate, and many even transferred their money to other currencies such as the dollar.
Hashtag Exclusive- Hassan Issa
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