Convention of January 1944:
An important stage in the history of the Syrian monetary system is The financial Convention between Syria, Lebanon, Britain and France on 25 January 1944, an Convention was reached between France and Britain, followed by a similar Convention between Syria, Lebanon and France, signed in Damascus on 9February.
The Damascus Convention stipulated the following:
As the new British-French Convention amended the parity between the two countries and made it 200 francs per pound instead of 176.625 francs in accordance with the March 1941 Convention, the parity of the Syrian pound against the pound sterling was 883 Syrian pounds sterling. The franc with the Syrian pound was 22.65 French francs per Syrian pound.
The freedom to buy sterling remains for the locals of Syria and Lebanon and does not halt without consulting the governments of the two countries in advance, and it Does not modify the exchange of the Syrian Pound against the Sterling before consulting the Syrian and Lebanese governments, Then came the book of General "Katro" Prime Minister in Syria and Lebanon to support the provisions of the Convention, and also included the following:
- Returning the gold coverage to the Bank of Syria and Lebanon.
- He has pledged the value of the assets of the Bank of Syria and Lebanon by making the difference in the case of the devaluation of the franc for the pound, French governments increase the amount of the bank's assets from the franc so that these francs maintain a constant and continuous value for the pound.
Reversing the January 1944 Convention:
When the French franc was devalued on 25December1945, the French government had to honor the commitments made in the January 1944 Convention, increasing the amount of francs covered by the Syrian currency, ie, Equal to the Sterling for what it had equal before the reduction.
In December 1946, France issued a new memorandum to Syria, abolishing the 1944 Convention, ending the Syrian pound peg to the pound, and indirectly re-imposing the Syrian pound to the franc because the French francs were covered.
On the level of individual transactions, individuals continued to transfer their assets from the Syrian pound to the pound sterling, France was concerned about this issue, especially as Syria was about to gain political independence. A memorandum was sent to the Syrian government in March 1946, With the pound sterling, and refused to provide compensation for the devaluation of the French franc. The note was like a debtor's warning to a creditor who apologized for paying his debts.
The February 1949 Convention:
to discuss the independence of the Syrian-Lebanese pound and to settle debts with France, Syria and Lebanon entered negotiations with France. continued until January 1948, when France reduced its currency. Lebanon agreed to the Convention with France, but Syria refused. This differentiation in dealing with the French measures formed the separation between Syrian and Lebanese criticism, Thus, Syria left the franc zone in January 1948 and amended the exchange rate of the pound against the francs, forcing France to conclude an Convention on 8 February 1949 with Syria confirming the secession of the Syrian pound against the French franc. The result of the separation between the Syrian pound and the Lebanese lira was that A country has its own procedures to regulate its economy and its currency. Lebanon went to the system of economic freedom to rely on foreign trade and unforeseen exports, while Syria went to the customs protection system to protect the emerging domestic industry. The separation of the monetary union between Syria and Lebanon was the beginning of the road to the separation of economic union between the two countries.
Syria applied foreign exchange controls in its dealings with Lebanon as of 14March, 1950.
The breakage policy between the 1944 and 1949 Conventions
- Under the 1944 Convention, Syria was able to extricate its money from the subordination of the French franc, a weak money, and to link it to sterling, a solid one. But Syria was unable to pursue an independent policy of breakage between 1944 and the end of January 1948.
- As a result of Syria's exit from the franc zone, it was able to adopt an independent policy of exchange the Syrian government alone, which determines the policy of the exchange to be followed, and has the authority (the exchange bureau) to draw and implement this policy.