This article is part of the August 2026 edition of the Syria Monthly Economic Digest. Click here to explore the full edition.
Key Developments: The Central Bank of Syria (CBS) began withdrawing the old Syrian pound on July 31, after the replacement deadline expired on July 30. In its August 2 statement, the CBS confirmed that old banknotes of all denominations had lost their legal-tender status (al-quwwa al-ibra’iyya, القوة الإبرائية), were no longer legally valid in financial transactions, and could not be used to settle obligations or discharge payments in any form. The CBS put the overall replacement rate above 95% of the monetary mass on preliminary estimates, up from the roughly 80% reported in July, while CBS Governor Mohammad Safwat Raslan separately cited a figure above 90%.
Citing that completion rate, the CBS granted an exceptional one-week window running from Sunday, August 2 to Thursday, August 6, during which holders could surrender old notes and receive their value in the new currency through all public and private banks and Syrian Post branches in every governorate, free of commissions, fees, taxes or other charges. After that window, withdrawals were to continue for five years exclusively through the CBS’ Damascus headquarters, using an online appointment-booking mechanism. To manage demand in the northeast, the CBS announced on August 3 the extension of operating hours at 20 Syrian Post outlets across Raqqa, Hasakah and Deir Ezzor to 8:30 AM–7:30 PM through August 6, and waived both prior online registration and the requirement to present 100 notes of a given denomination for the duration of the window. Two days later, on August 5, the CBS announced that the exchange process in the northeastern governorates would be extended until August 20.
On August 9, the CBS again reversed course, allowing withdrawals to continue through authorized Syrian Post outlets in all governorates for a period of five years, so that citizens need not travel to Damascus, and that it was coordinating with the Syrian Post to increase the number of counters. That decision effectively canceled the earlier restriction on direct exchanges, limited to the eastern governorates, until August 20. On August 14, it opened an electronic application channel under which the counter-value is credited to a bank account nominated by the applicant, with eligibility restricted to Syrian natural persons and one application permitted per holder.
Amid these decisions, confusion over the currency exchange process was felt unevenly, with the Northeast, still in the process of political, security, and economic integration, seemingly bearing the brunt. Reports in early August said delays in opening exchange centers in Raqqa and Hasakah caused near-paralysis in buying and selling, and that many residents disposed of their old-currency savings by selling them for dollars at rates reaching SYP 17,000 old (SYP 170 new) to the dollar, well above the prevailing rate of around SYP 130 to 132 per USD. Reporting from Qamishli in late August, Alexander McKeever told The Syria Dispatch that the old currency remained the dominant medium of exchange in the city despite having lost its legal-tender status, with most purchases settled in old notes and change returned in them (Visit Alexander’s publication: This Week in Northern Syria).
Reports also documented a parallel market in Damascus in which the standard offer was SYP 750 new for every SYP 100,000 old (instead of SYP 75,000), with intermediaries trading banknotes as an actual commodity and targeting the elderly, the low-income, and those unable to reach official centers before the deadline.
Internal security forces in Raqqa detained three money changers on August 4 for exploiting citizens and manipulating exchange rates in old-currency transactions. Still, such operations do not seem to be strong enough deterrents to prevent abuses.
In Hasakah, rumors in mid-August that August 18 was the final date for accepting old notes triggered renewed panic, prompting the CBS’ media department to restate that the end of legal-tender status did not extinguish the right to exchange; residents described petrol stations, phone dealers and wholesalers refusing old notes or demanding payment in dollars, and queues at centers that ran out of new banknotes. Governor Raslan responded to the Hasakah dispute in a Facebook comment, questioning the extent to which the bank was responsible for “refining people’s morals” and attributing part of the disruption to profiteering.
Adding to the confusion and the quick succession of decisions, shortages of small denominations, especially the CBS decision not to print a SYP 5 note, despite printing a SYP 25 note, compounded problems related to the new currency. For instance, reporting from the coast documented grocers substituting an egg or a piece of confectionery for change of SYP 10 or 25 new, and pharmacists offering paracetamol sachets or plasters in place of small balances, with one public employee reporting he had yet to handle a SYP 25 new note. The Syria Dispatch observed the same pattern firsthand in Damascus during the first two weeks of August, with SYP 5 change either withheld altogether or returned as a single falafel or apple, or in old SYP 500 notes, nominally equivalent to SYP 5 new but no longer legal tender.
The lack of small denomination also led internal transport drivers in Raqqa striking on August 10 and gathering outside the governorate building over the same shortage: fares are set at SYP 30 new (SYP 3,000 old) while passengers tender 20 or 25, and drivers described returning biscuits, chewing gum and lighters in lieu of change, demanding either a fare increase to SYP 50 new (SYP 5,000 old) or subsidised diesel allowing them to hold the fare at SYP 20 new (SYP 2,000 old). The transition also remains incomplete in the unit of account, even with state institutions and large companies such as the General Telecommunications Company and Zain (formerly MTN) still issuing bills denominated in old lira, and the old SYP 500 note still circulating in transport and markets.
The liquidity squeeze caused by a lack of new currency in the market migrated into the digital payments layer and money exchange companies. Complaints in Aleppo surfaced on August 7 that exchange offices would settle Sham Cash balances only in dollars, and that intermediaries were charging between SYP 150 and 180 for every SYP 10,000 new withdrawn. A withdrawal ceiling of SYP 14,400 new on August 11 at one Al-Fouad branch, which was also settling dollars at SYP 119 new, was also recorded. Later reporting found that numerous Damascus exchange companies had suspended the service entirely, citing a failure in the electronic link with the CBS, while sources attributed the suspension to the bank halting cash withdrawals by those companies beyond limited quantities.
Sham Cash responded by launching an online complaints channel and reaffirming a maximum withdrawal commission of three per thousand (0.3%). Marketing director Mohammad Basiki subsequently set out a ceiling of three per thousand on withdrawals and two per thousand on deposits, down from five per thousand before the new currency, noting that the company retains none of the commission, that 29 authorized companies provide the service, and that the regulation of exchange offices falls to other authorities. By August 20, public-sector employees could not convert salaries into cash at any office, and an informal market emerged in which brokers discounted balances by as much as 15% for cash. Basiki denied any platform-wide ceiling, while an exchange-sector source attributed the rationing to CBS liquidity management and to the volume of old currency withdrawn exceeding the volume of new currency injected.
Why It Matters: Both risks that materialized in August, the convoluted post-July 31 procedure and the liquidity crisis, were flagged in advance. On August 3, one expert warned that confining exchange to Damascus would open a parallel market in old notes, with holders unable to travel selling below face value to intermediaries who would capture the spread, while another argued that the five-year horizon was generous but that outcomes depended on banking-sector liquidity and the easing of withdrawal restrictions; a third attributed the change shortage to the concentration of issuance in higher denominations. The many decisions and reversals in the first two weeks of the month are both confirmation that the mechanism was designed without its distributional consequences worked through and a sign of responsiveness, and they eased access to the service while leaving the conditions attached to it untouched; no remedy has been announced for the denominations at all.
As for the liquidity crisis itself, one economist calculated that an economy of USD 18–19 billion settling some 85% of payments in cash needs a working stock of SYP 400–430 billion new, against which he put immediately usable cash at SYP 300–340 billion new (USD 2.5–2.8 billion)—a gap sized at 20–28% of the economy’s cash requirement, stalling roughly SYP 4 billion new (USD 33 million) of transactions a day and concentrated geographically enough to open an 8.5% spread between the dollar rate in eastern exchange shops and the rest of the country.
That number describes a failure which has now materialized through every layer of the financial and transaction chains, with banks rationing withdrawals and exchange and transfer companies, which hold the country’s largest private cash inventories and exist to convert balances into notes, suspending the service outright in Damascus. The most telling adaptation is that some offices in Aleppo would pay only in dollars. Faced with a shortage of one currency, the SYP, the market substituted another, the USD. As a result, the redenomination process, initially intended to restore confidence in the national currency, has, in its execution, made a foreign one the more reliable medium of exchange in parts of the country.
Far from a mere technicality, this incidence is also regressive at every stage. For instance, the Agricultural Cooperative Bank’s decision to route 25% of wheat farmers’ net dues through Sham Cash came precisely because the CBS lacked the cash to pay in full. Public employees and now farmers—people paid in fixed sums they must convert entirely into cash to live on, especially since digital payments scarcely exist in Syria—absorb a levy of up to 15% to access their own money, while anyone holding dollars or bank deposits they need not draw down pays nothing. This is a transfer from the poorest cash-dependent households to whoever holds banknotes, and it is invisible in every official statistic.
Still, the bigger question the month, and those prior, in fact, leaves unanswered is why the CBS is short of cash at all. The bank has not published a figure for new currency in circulation, and the possibilities are not equally benign: a printing or distribution bottleneck is a logistical problem that will resolve, while a deliberate decision to hold the money supply tight in order to force adoption of electronic payment is a policy choice being made without being announced.
The August 22 adoption of a licensing and supervision framework for payment service providers and e-money issuers, and the floating of semi-monthly salary payments to spread cash demand, both point toward the second. Still, lack of liquidity could also be a way for the CBS to stabilize the exchange by constraining money in circulation, but this is not an ideal policy decision (READ: Currency Replacement Ends as Syria Builds New Monetary Policy Tools). Back to digitization, this remains a defensible objective, and Syria will need it. But adoption compelled by the unavailability of cash is not the same as adoption earned by a payment system people trust, and people who did not choose it are now paying the bill in 15% increments.
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