Local currency in less or developing countries part.1

Currency exchange between neighbouring or regional countries became a norm primarily due to the growth of trade, tourism, and cross-border investment. In earlier times, barter systems were used, but as economies became more complex, standardized currencies emerged. With neighbouring nations often having different currencies, exchange systems evolved to facilitate commerce, starting with informal exchanges and progressing to regulated currency markets. Proximity encouraged frequent trade, making it essential for businesses and individuals to easily convert one currency into another. Over time, central banks and financial institutions developed formal exchange mechanisms, and in some cases, regional agreements such as currency pegs or unions (e.g., the Eurozone) were introduced to streamline economic interaction.

Economically, such exchange systems have enabled neighbouring countries to boost trade volume, increase market accessibility, and foster economic interdependence, leading to mutual growth. For example, in regions like the ASEAN bloc, currency exchange facilitates both goods trade and investment flows. However, there are limitations: fluctuating exchange rates can introduce uncertainty, raising the cost of cross-border transactions. Additionally, smaller economies are often more vulnerable to the monetary policy changes of larger neighbours, especially if they peg their currency to a dominant one. In some cases, speculative attacks or sudden capital flight can destabilize the exchange rate and harm economic stability.

On a global scale, currency exchange rates represent the value of one nation’s currency against another, influenced by factors like interest rates, inflation, trade balances, and political stability. Rates can be determined by floating exchange systems, where market forces set values, or by fixed/pegged systems maintained by governments. Major global currencies such as the US dollar, euro, Japanese yen, and British pound act as benchmarks in international trade and finance. While global currency exchange allows for efficient international commerce, it also means that economic shocks in one major economy can ripple worldwide, highlighting the interconnected nature of modern markets.

Part.2

Syriaver the past two weeks, Syria has implemented significant reforms in its monetary policy as part of a broader economic restructuring. The Central Bank of Syria has announced plans to revalue the Syrian pound by removing two zeros from its currency notes. This move aims to simplify transactions and restore public confidence in the national currency, which has depreciated by over 99% since 2011. New banknotes, potentially printed by the Russian firm Goznak, are expected to be introduced by December 8, with a dual-currency transition period lasting one year. The revaluation also serves as a symbolic break from the previous regime, as current notes feature images of former President Bashar al-Assad and his father .

Central Bank Governor Abdulkader Husrieh has outlined a comprehensive strategy focusing on monetary stability, banking sector restructuring, and the development of national payment systems. Efforts are underway to enhance the central bank's independence in monetary policy decisions, moving away from the tight control exercised during the previous regime. Additionally, the central bank is working on licensing new banks to meet the evolving needs of the Syrian economy and attract investment. A significant step in this direction is Syria's imminent rejoining of the SWIFT international payment system, which is expected to facilitate trade, reduce import costs, and bring foreign currency into the country .

Despite these positive developments, challenges remain. The Syrian economy continues to grapple with high inflation, a depreciated currency, and the legacy of years of conflict and sanctions. Monetary experts caution that without addressing underlying issues such as corruption, capital flight, and the informal economy, these reforms may not be sufficient to restore financial stability. The central bank's leadership has acknowledged that rebuilding trust in the currency will require more than just cosmetic changes . Nevertheless, the recent reforms represent a significant step toward economic recovery and integration into the global financial system.