The Second World War bear many and multiple effects, France and the French colonies, including Syria, were shaped by economic and political influences.
As per the subordination to France, the headquarters of the Bank of Syria and Lebanon were transferred from Paris to Beirut, The French High Commissioner amended the 1938 Convention in accordance with resolutions and decrees issued by the Board of Directors.
The amendments aimed at enabling the bank "Syria and Lebanon" to meet the needs of the occupation armies of the necessary banknotes. Thus, the amount of commercial bonds covered by the coverage was increased to 25% of the volume of the money-in circulation and all the bank's loans to the State were covered.
All of the above measures sought to facilitate the issuance process without the bank having to meet the issuance coverage by the francs or other currencies, as it can use other means ready to it.
plus, after the armies of the allies occupied Syria and Lebanon, the country spend a great deal of sterling money to meet the needs of these armies of local products, If the British armies were obliged to do so, And the exchange office transferred the sterling pound and the various types of coins it had to the Central Treasury of Free France to be replaced by French francs. French francs accounted for 98% The amount of cash issued in this form amounted to 800 million Syrian pounds. France seized the equivalent of the pieces paid for the Syrian production.
As a result of the March 1941 Convention between the French and British governments, the exchange rate of the two countries was determined between the two countries. The two parties noticed that the Convention could be applied to every land belonging to the Council for the Defense of the French Empire and every land it would follow. Pound Sterling at 883.125 Syrian Pounds.
The expenses of the allied armies caused huge inflation in circulation and bank deposits, The Bank of Syria and Lebanon in the report of the Board of Directors for the years 1941-1945 estimated that this inflation is derived from the huge quantities of Syrian pounds required by allied armies from the exchange office for delivery of foreign currencies.
It should be noted that the expenses of the armies in the country that caused the increase in money in circulation were not accompanied by the possibility of import from abroad and therefore prices have been rising continuously, and effects of monetary inflation appear in the country.
It did not then open the way for local capital to drain out of the country and ease the burden on the local market. Accordingly, a decision was made to allow this, which led to the easing of monetary inflation, that about 400 million Syrian pounds within three years left the country.