The Egyptian pound became the country's actual currency in the Syrian coast. Within Syria, the transactions were limited to gold coins, especially the Ottoman lira/pound, due to the lack of habituation of the local people to deal with paper money, The Egyptian pound continued to be dealt with until March-31-1920, when Syria was placed under the French mandate. The High Commissioner issued a decree abolishing the Egyptian Pound and issuing a Syrian-Lebanese paper cash based on the French franc and this began in May 1920.
But, the decision issued in March 31, 1920, was not confined to the interior region, because of the Kingdom of Arabia inside Syria, which was crowned by King Faisal I, and the Faisaliah government issued on April 12, 1920 a law guaranteeing the foundations of the monetary system of the Faisali-based mineral base, The main currency of this dinar was 6.45161 grams of 0.900 grams and divided into 100 piasters, plus it was stipulated by the law of the Arab riyal coining, which is a piece of silver weighing 25 grams of a caliber of 0.800, each 25 piasters, and left the Faisaliah government of the Egyptian currency, The government of Faisal did not have a long time French armies followed the interior on the impact of the Battle of Maisalon on July 24, 1920, it was the first decision issued by the High Commissioner on 9 August,1920, which expanded the scope of force in the coastal area of the monetary system application to include Syria's internal areas.
The decision of March 31, 1920 made the Syrian-Lebanese pound the basic currency unit in the country, The coverage of this currency consists of French francs, which overcome the other items of the coverage, The pound is divided into 100 piasters, making them redeemable and can be replaced by a check on Paris at a rate of 20 French francs,
The mandate authorities withdrew Egyptian pounds from circulation through banks and army funds, The Egyptian currency was exchanged in Syrian currency on the basis of the parity price of 325 Syrian piasters per Egyptian pound. France achieved the issuance of Syrian currency and the withdrawal of the Egyptian pound from circulation is very important in That period :
- The French authorities can finance their armies with Syrian money, The Egyptian pound's survival means that the pound is bought by the French authorities, which leads to a decrease in their gold or sterling reserves and affects the exchange rate of the franc in exchange markets.
- The withdrawal of the Egyptian pound from circulation and the cancellation of dealing with it and replacing it with Syrian pounds to France allowed a large amount of Egyptian currency withdrawn from circulation, as it increased its foreign exchange assets and enabled it to make payments with the Sterling area.
January 1924 Convention:
It was not normal for the monetary system in Syria and Lebanon to remain on the basis of two decisions issued by the French High Commissioner. It was unacceptable that the right of issuance to a foreign bank was granted by a decision of occupation without the consent of the local governments.
Negotiations started under the supervision of the high commissioner, between The Bank of Syria and the local authorities, which led to the signing of a monetary Convention on 23 January 1924, recognized the Syrian-Lebanese, and approved the issuance of the concession to the Bank of Syria, which became the Bank of Syria and Lebanon for a period of 15 years started from 1 April 1924, confirming the situation The current cash established by the High Commissioner's decision in 1920, the Convention was held under the pressure of the Mandate authorities, and despite the strong opposition expressed by the people and their representatives in the Federation Council, that governments that have signed the Convention are the governments of the Mandate.
The February 1938 convention:
Negotiations with the governments of Syria and Lebanon began to renew the 1924 Convention before its expiry on 31March 1939, These negotiations resulted in the separate Convention with the Lebanese government on 29May 1937, renewing the concession to Lebanon and Syria Bank for 25 years From the first of April 1939, As for the Convention with the Syrian side, it was slow, and faced several difficulties. However, the two parties reached a draft Convention on 25 February 1938, but it was not presented to the Syrian Parliament because of the disruption of constitutional life by the Mandate authorities on 8 July 1938, In March 1992, before the end of the 1924 Convention, the French High Commissioner issued a decision extending the term of this Convention up to March 1964, and then issued A decree by Government of Directors on 9 September 1939 adopted by the February 25 Convention and the Statute of the Central Bank annexed thereto, and the date of entry into force of the Convention from 1 April 1939 to 1 January 1940.
The basics of the Syrian monetary system between the 1924 and 1938 conventions:
The Syrian-Lebanese pound was set in the two Conventions mentioned between the Syrian and Lebanese governments and between the Bank of Syria and Lebanon for the French franc on the basis of 20 francs per pound. The bank intervened in the money market as a buyer and purchaser of the Syrian pound against the franc at this price.
Elements of coverage in the 1924 Convention:
Article 8 of the 1924 Convention provided that the coverage against the lire issued in the following form:
- Gold or liabilities of foreign governments convertible into gold.
- Foreign or local commercial papers with a maturity of not more than 90 days, foreign commercial papers bearing two acceptable signatures, and local commercial papers must bear at least three acceptable signatures.
- Deposit coverage in French francs is placed on demand in an account with the French Treasury, but not more than one third of the issued cash, and the French Treasury pays at least 1.5% interest.
- Optional coverage in francs is placed on demand in the account of the Bank of Syria and Lebanon with the Treasury, payable at least as much as the interest paid on French private deposits. This coverage, in addition to coverage in commercial papers, should not exceed 22% of the issued money.
- Bonds of the French Government or bonds with a guarantee of up to two years and must be deposited with the Bank of France.
Elements of coverage in the 1938 Convention:
The 1938 Convention defined the elements of coverage more clearly than the previous Convention, These elements were divided into two parts: mandatory elements - optional elements, mandatory elements of coverage are consisted from:
- Gold with an initial rate of 10% gradually rising to 30%.
- A deposit is required in French francs. And it shall be placed in the Central Fund of the French Treasury in Paris and shall bear interest not less than 1.75% per annum. The Convention stipulated that the deposit shall be 25 to 26% of the total circulation.
- An interest-free advance for the Syrian government worth 250,000 Syrian pounds.
Optional coverage elements consist of:
- The bonds are deposited with the French government. These bonds are to be deposited with the bank of France and are to be for a maximum period of five years, 25% for two years, and then for a decision issued in 1941 to be deposited in Damascus or Beirut.
- commercial Bonds or Bills, bearing three signatures not exceeding 90 days but not exceeding a total of 12% of the currency in circulation, then increased to 25% by the High Commissioner's decision of 4 September 1939.
- An advance granted by the Bank of Syria and Lebanon to the Syrian Government for the implementation of the urban projects which the State intends to undertake does not exceed (1250000) Syrian Pounds, and pays interest thereon 4%.
- Deposits in French francs and deposited in the Central Fund of the French Treasury, for which interest is paid at no less than the interest paid by the Bank of France to the deposit holders pending the request.
Characteristics of coverage in the 1924 and 1938 Conventions:
It must be noted that the 1924 Convention, which was during most of the in-war period, and that this Convention made the large part of the coverage is in the form of assets in French francs.
There is no doubt that this Convention provided for the existence of gold or foreign securities convertible into gold in coverage, but it did not specify a minimum rate for these assets. Therefore, the Bank of Syria and Lebanon could not put gold or foreign exchangeable securities in coverage, Gold medium during the term of this Convention 4% of coverage.
The 1938 Convention is different from the 1924 Convention in the following: it did not set a maximum limit for transaction, while the 1924 Convention set a maximum trading limit of 25 million Syrian - Lebanese pounds, and it was even nominally separated between the Syrian pound and the Lebanese pound. While the new Convention stipulated that the profit from the increase in the value of gold coverage should be returned to the governments of Syria and Lebanon and that the ordinary profits of the coverage between the bank and the governments should be shared.