The Central Bank's decision is based on the policy belief that re-opening credit and funding channels depends totally on providing the required liquidity for all banks, in addition to observing the economic feasibility for each loan. This means it is currently impossible to issue loans. It should be noted that the liquidity in some banks is less than the ratios set by the monetary and credit council.
The issue is not related to individuals' civil or legal status. It is based on providing the basic credit elements in order to issue loans, the availability and economic feasibility for these loans and the ability to repay loan payments.
Individual loans are depositors’ funds and bank money, therefore, the classification of a person is irrelevant to the case of re-opening funds and loan channels.
The bank's decision may be economically sound, but it is in conflict with the concept of the 'state' which the regime has tried to achieve for decades.
The move is part of several consecutive withdrawals from liberal and free market policies adopted at the 10th Baath Party conference in 2005, that include prosecution of banking companies, restrictions imposed on private banks, charging businessmen under terrorism laws and freezing some Arab and European investments. All of this gives the impression that the regime is trying to nationalize the Syrian economy and force the country to return to its socialist-era policies, similar to the time of unity with Egypt in the early 1960s.
Countries interested in improving production, economy and living standards should not see the overall objective in terms of profit. How can a country led by Bashar Assad waste all of its wealth on financing a war against freedom and dignity, and not finance public banks in order to rebuild destroyed facilities, infrastructure and industry for the Syrian market?
Private banks have the right to stop loans or even to leave the market if there are no safe investments. But the policy of the Governor of the Central Bank of Syria, Adib Mayaleh to stop loans and stop finance for economic facilities contradicts with the goals of government obligations, which should help banks by pumping money into the economy and increase capital, similar to the way American and European governments responded to the financial crisis in 2008.
The Central Bank did not mention the most important point which led to this decision, which is monetary inflation which has reduced the Syrian Pound exchange rate. This means no interest rate can compensate bank losses if they continue to issue loans. The last official report published by the Monetary Council in Damascus about the operating of banks in Syria confirmed huge losses due to decreasing in dollar exchange rate.
During the last three months of 2013, the Jordan-Syria bank losses reached 850 million Syrian Pound ($6 million), making its book value equivalent to 2.45 billion SP ($18 million). The bank of Syria and Overseas losses reached 400 million SP ($3 million), making its book value equal to 1.47 billion SP ($10 million).
The situation is simpler than the Central Bank explained; deposits stopped in all banks, inflation swallowed all deposits and no interest rate can make up the losses. Loans exceeded deposits even before the revolution. These loans exceeded banks' capitals and the banks' obligatory deposit in the Central Bank was a guarantee in emergency situations.
There is also a psychological factor to the crisis, which has seen a rise in uncertainty among senior and junior depositors over the possibility of recovering their deposits. Confidence and regulations are what attract investors, funds and depositors, not exemptions, speeches or logos.
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