Defining the Central Bank of Syria’s to-do list

After Donald Trump agreed to lift sanctions, Syria’s central bank is now in the spotlight. Its independence needs to be protected from political interference through transparency and accountability.

Andrei Cojocaru

Defining the Central Bank of Syria’s to-do list

Toufic Chanbour

last update on 13 Jun 2025

Abdulkader Husrieh possesses numerous qualifications. He holds a Bachelor’s degree in Computer Science, a Bachelor’s degree in Law, a Bachelor’s degree in Business, a Master of Business Administration (MBA) degree, and a PhD in Finance. It is just as well. Qualifications may be needed in his new job as governor of the Central Bank of Syria.

Some of his key priorities are ensuring the Central Bank’s independence from political interference, advancing principles of good governance and transparency to modernise and develop banking services, and promoting the financial and banking sectors to restore confidence, given their key role in the reconstruction process, attracting investment, and establishing monetary and economic stability in Syria.

The Syrian Monetary Law of 2002 lets the Monetary and Credit Council (MCC) “set and manage monetary policy in accordance with the general strategy of the state and the needs of the national economy”. It also requires the Central Bank to implement policy as decided by the MCC, and to operate under the supervision and guarantee of the state, notably the Council of Ministers. The MCC comprises the Governor, his two deputies, five government officials, and three experts appointed by presidential decree.

A positive aspect of the framework is the separation of the MCC (which sets policies) from the Central Bank (which carries out implementation). This reduces the risk associated with a single entity being responsible for both planning and execution. Yet there are potential problems. Members of the MCC are appointed by decree based on what they represent—not their competence and experience. They are therefore not necessarily independent or immune to political pressure.

Systems can be put in place to help. The Central Bank and the Ministry of Finance should collaborate by establishing a mechanism that allows the finance minister to review the Central Bank’s decisions before they are implemented. But the Central Bank’s independence is necessary to prevent the government from exerting pressure to obtain quick and easy financing for its budgets, and to prevent the misuse of monetary policy for short-term political and electoral gain.

The exchange rate is another area in which central bank independence is crucial. The government, in agreement with the MCC, sets the target exchange rate for the Syrian pound, then allows the Central Bank to maintain it.

Andrei Cojocaru

Degrees of independence

In developed countries like Germany and Switzerland, the constitution is considered the main guarantee of independence, because it clarifies tasks and responsibilities and defines the specific powers of each entity. In countries like Lebanon, however, the law grants the Central Bank administrative and financial independence, which political authorities either guarantee or undermine depending on the circumstances.

In short, there are degrees of independence, meaning that there is no one-size-fits-all. Each central bank system is unique. Governors often need to advocate for their interests, such as when the central bank refuses to finance the government’s needs. Some make their disagreements public.

When the current Canadian Prime Minister, Mark Carney, was Governor of the Bank of England, he objected to the UK's withdrawal from the European Union ('Brexit') by resigning. Similarly, when German Chancellor Helmut Schmidt and French President Valéry Giscard d'Estaing took the first steps to establish the European Monetary System, Karl Otto Pöhl, then governor of the Bundesbank, objected because Germans could lose their hard-earned monetary stability.

Some say Parliament should enshrine the Central Bank's independence. The Bank would then report its policies to Parliament, leading to joint dialogue sessions—not hearings—between Parliament (or its specialised committees) and the Bank's management. This allows for genuine debate and enables the Bank to explain why it made certain decisions. Parliaments (or their committees) can also play a role in approving or declining the appointment of the Central Bank's management.

Transparency gives citizens the right to know what policies are being decided on their behalf, with decision-makers publicly accountable for their actions. The central bank is held to a higher standard of transparency because it exercises its duties with a higher degree of independence than other public institutions. The International Monetary Fund's Code of Good Practices on Transparency in Monetary Policy provides a guide.

The independent Syrian Central Bank must adopt similar transparency arrangements, clearly communicating the objectives of its monetary policies, their legal and economic foundations, and related statistics and information to the Syrian public. This will foster commitment from Central Bank officials to implement the stated objectives and policies, allowing public statements to be compared with actual actions and results.

The Monetary and Credit Council "sets and manages monetary policy in accordance with the general strategy of the state and the needs of the national economy"

Syrian Monetary Law, 2002

The IMF typically insists on such transparency requirements as a prerequisite for signing any agreement with a state or entity, but transparency need not be absolute in all circumstances. In some cases, this may have negative repercussions, so a balance must be struck between accountability and respect for privacy and the confidentiality of information.

An independent Syrian Central Bank would be required to declare its monetary objectives, the structure of the policy-making body, its tasks, meeting agendas, and the frameworks and tools it uses to achieve its objectives. Central banks in several countries already release the minutes of their monetary policy committee meetings a specific amount of time after the meeting, to give markets confidence.

These minutes record how votes were cast and the opinion of each committee member. This facilitates oversight, involves the public, and strengthens communication and trust between the public and the bank, which in turn reduces opposition to the bank's independence. Likewise, bank officials can take responsibility for their actions without diminishing the bank's independence.

Experience shows that entrusting a central bank with a primary mission other than maintaining monetary stability (its core task) can damage its credibility and put pressure on its independence. Examples include tasking the central bank with supervising banking activity.

It can lead to inappropriate policies or decisions that may not be justified in terms of monetary stability. The effects of financial decisions often take time to manifest, whereas the results of decisions made in the banking sector are clearer and faster. This could delay the evaluation of the officials' decisions until after their term ends.

The IMF typically insists on transparency requirements as a prerequisite for signing any agreement with a state or entity

Banks typically prefer the central bank to supervise and oversee their affairs, as this increases the likelihood of the central bank's intervention to assist them when necessary. Yet maintaining monetary and payment system stability is the central bank's core mission, and some Governors are known for sticking stubbornly to it, including Karl Otto Pöhl, the former governor of the German Bundesbank, and Mervyn King, the former governor of the Bank of England.

King threatened to resign after the then-Chancellor, George Osborne, said he wanted to dissolve the Financial Services Commission (which oversees all banking and financial activity) and transfer its supervisory powers to the Bank of England. King opposed the expansion of the Bank's powers because it would hinder its efforts to contain inflation.

Importance of oversight

On the flipside, central banks operating independently in isolation with no accountability or oversight (as opposed to in partnership with the government) can have disastrous consequences, as demonstrated in Lebanon, where a recent forensic audit report by consultancy firm Alvarez & Marsal on the Central Bank's past operations highlighted significant management deviations, concealed through unusual accounting entries.

It is therefore crucial to adopt mechanisms that ensure the Central Bank of Syria is appropriately overseen, once its independence is established. The first step is to separate internal oversight from the authority managing the bank's operations and link it to the supervisory authority, namely the MCC.

It is also important that the appointment of external oversight commissioners for the bank's operations be linked to an external authority, such as the government. Some countries prefer Parliament to appoint these commissioners, and to review the bank's annual reports and the commissioners' oversight findings. Both the European Union and France entrust the Court of Auditors with additional external oversight operations on the Central Bank's decisions and operations.

Central banks operating independently in isolation with no accountability or oversight can have disastrous consequences, as demonstrated in Lebanon

Democratic credibility

In his book "Balance of Power: Central Banks and the Fate of Democracies," economist Éric Monnet argues that central bank policies are too important to be left solely in the hands of independent authorities and technocrats, suggesting that there should be genuine democratic oversight instead.

Central banks are not purely technical organisations, he says. Their operations involve compromises and risks. This is why some countries, such as Switzerland and Belgium, have established their central banks as joint-stock companies with special regulations that allow general assemblies to oversee the activities of these banks.

The independence of the Central Bank of Syria will undoubtedly enhance its credibility and enable it to carry out its duties free from political interference. These duties include expertly managing monetary policy to achieve financial stability and supporting economic growth by facilitating payments, stimulating spending, and encouraging investment.

The bank's independence also enhances its ability to modernise and develop its services, making decisions based on sound economic principles that align with monetary policy requirements. Somewhere in Mr Husrieh's years of study for his numerous qualifications, these principles were hopefully covered.

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