The public monetary authority in northwest syria

Introduction

To mitigate the impact of the rapid and continuous collapse of the Syrian pound, which exceeded 3,000 SYP per USD in early July 2020, local authorities in northwest Syria have decided instead to trade using the Turkish lira. Both the Syrian Interim Government (SIG) and the Syrian Salvation Government (SSG), as well as a large portion of the population, view the shift as a “solution to the constant price fluctuation", according to interviews published on local media agencies.

Local authorities however have not explained the political aspect of this shift with regards to its effect on the future of the area and the future of the relationship between Turkey and the SSG. The introduction of the Turkish lira into SSG's areas could be considered a new indication of Turkey's determination to achieve lasting stability in the northwest.

Allowing use of the Turkish lira also points to Turkey's acceptance of the SSG as the legitimate governing authority in the area – all lira in SSG areas (introduced as of 14 June) are exclusively distributed via the SSG and its monetary institutions. The SSG has subsequently reactivated the Public Monetary Authority (PMA), previously known as the General Organization for Cash Management and Consumer Protection and appointed it as the sole committee authorized to buy Turkish lira from Turkey and distribute it into the local market through the SSG-owned Sham central bank in Idleb.

In addition to monopolization of distribution of the Turkish lira, reactivating the PMA has also been used to consolidate control over the hawala (informal monetary transfer systems) and currency exchange services in the northwest. Since 14 June, the PMA has taken several noteworthy steps toward regulating the sector, including introducing mandatory registration of hawala and currency exchange offices, which almost 80 companies have complied with so far.

These steps could pose a significant challenge to international and local humanitarian organizations implementing projects in northwest Syria due to potential donor-compliance issues related to Hay’at Tahrir Al-Sham (HTS) (designated a terrorist organization by the US and Canada) or its affiliated government, the SSG.

In this report, key messages and points from these documents that are of interest to humanitarian agencies, partners, and donors working in northwestern Syria are highlighted.