Browse Profiles > Syria > Core Principles for Systemically Important Payment Systems
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Standards Compliance Index 4.17 out of 100 81
Business Indicator Index 3.91 out of 12 77
Syria

Core Principles for Systemically Important Payment Systems

Summary
According to the International Monetary Fund's (IMF) 2006 Selected Issues report, Syria does not have a real time gross settlement (RTGS) system or an electronic or automated clearing check system. Consequently, major payment transactions are still conducted manually with large payments being sent and processed using checks and other paper-based payment orders without sufficient risk management processes or assurances. Most importantly, as a direct result of the aforementioned inadequacies, the IMF report states that Syria's payment system does not observe many of the Core Principles for Systemically Important Payment Systems. Nevertheless, the 2006 IMF report notes that a joint explorative mission on payment and security settlements involving the IMF and the Arab Monetary Fund (AMF) visited Syria. At the time, the report concluded that Syria was expected to acquire an RTGS system a few months after the mission's end. The website of the Central Bank of Syria (CBS) does state that the central bank is working to establish an infrastructure for an electronic payment and settlement system. However, as of August 2008, there is no publicly available information as to whether or not Syria has indeed acquired an RTGS system.

    General Overview

    The International Monetary Fund's (IMF) 2006 Selected Issues Report observes that Syria does not have a Real Time Gross Settlement (RTGS) system or an electronic or automated clearing check system, adding that Syria has achieved very little progress in modernizing its payments system. Consequently, according to the report, major payment transactions are still conducted manually with large payments being sent and processed using checks and other forms of paper-based payment orders without sufficient risk management processes or assurances. According to a 2004 report by Creane, S., et al "cash is the principal means of payment in Syria's underdeveloped payment system" (p. 40). Most importantly, as a direct result of the aforementioned challenges, the 2006 IMF report states that Syria's payment system does not observe many of the Core Principles for Systemically Important Payment Systems. In its 2007 Article IV Consultations, the IMF concludes that "slow progress in developing the payments system imposes large costs on banks" (p. 21). The IMF's Selected Issues report recommends that Syria modernize its payment and settlement systems, adding that "this is essential to increase the effectiveness of inter-bank funds transfers, minimizing payment risk and facilitating fund management through transferring funds in a faster, safer and more reliable way" (p. 41).
    The 2006 IMF report notes that a joint explorative mission on payment and security settlements involving the IMF and the Arab Monetary Fund (AMF) visited Syria. At the time, the mission concluded that Syria was expected to acquire an RTGS system a few months after the mission's end. The website of the Central Bank of Syria (CBS) does state that the central bank is working to establish an infrastructure for an electronic payment and settlement system. However, as of August 2008, there is no publicly available information as to whether or not Syria has indeed acquired an RTGS system.


    The Principles

    I. The system should have a well-founded legal basis under all relevant jurisdictions.

    There is insufficient information publicly available as to Syria's compliance with this principle.

    II. The system's rules and procedures should enable participants to have a clear understanding of the system’s impact on each of the financial risks they incur through participation in it.

    There is insufficient information publicly available as to Syria's compliance with this principle.

    III. The system should have clearly defined procedures for the management of credit risks and liquidity risks, which specify the respective responsibilities of the system operator and the participants and which provide appropriate incentives to manage and contain those risks.

    There is insufficient information publicly available as to Syria's compliance with this principle.

    IV. The system should provide prompt final settlement on the day of value, preferably during the day and at a minimum at the end of the day. (Systems should seek to exceed the minima included in this Core Principle.)

    There is insufficient information publicly available as to Syria's compliance with this principle.

    V. A system in which multilateral netting takes place should, at a minimum, be capable of ensuring the timely completion of daily settlements in the event of an inability to settle by the participant with the largest single settlement obligation. (Systems should seek to exceed the minima included in this Core Principle.)

    There is insufficient information publicly available as to Syria's compliance with this principle.

    VI. Assets used for settlement should preferably be a claim on the central bank; where other assets are used, they should carry little or no credit risk and little or no liquidity risk.

    There is insufficient information publicly available as to Syria's compliance with this principle.

    VII. The system should ensure a high degree of security and operational reliability and should have contingency arrangements for timely completion of daily processing.

    There is insufficient information publicly available as to Syria's compliance with this principle.

    VIII. The system should provide a means of making payments which is practical for its users and efficient for the economy.

    There is insufficient information publicly available as to Syria's compliance with this principle.

    IX. The system should have objective and publicly disclosed criteria for participation, which permit fair and open access.

    There is insufficient information publicly available as to Syria's compliance with this principle.

    X. The system's governance arrangements should be effective, accountable and transparent.

    There is insufficient information publicly available as to Syria's compliance with this principle.

    A. The central bank should define clearly its payment system objectives and should disclose publicly its role and major policies with respect to systemically important payment systems.

    There is insufficient information publicly available as to Syria's compliance with this principle.

    B. The central bank should ensure that the systems it operates comply with the Core Principles.

    There is insufficient information publicly available as to Syria's compliance with this principle.

    C. The central bank should oversee compliance with the Core Principles by systems it does not operate and it should have the ability to carry out this oversight.

    There is insufficient information publicly available as to Syria's compliance with this principle.

    D. The central bank, in promoting payment system safety and efficiency through the Core Principles, should cooperate with other central banks and with any other relevant domestic or foreign authorities.

    There is insufficient information publicly available as to Syria's compliance with this principle.

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    Sources of Assessment

    International Monetary Fund, "Syrian Arab Republic: Selected Issues," Country Report No. 06/295, Washington, D.C.: IMF, August 2006. Available from International Monetary Fund website. Accessed on August 7, 2008. (IMF 2006)

    Relevant Organizations

    Central Bank of Syria (CBS)

    Ministry of Economy and Foreign Trade (MEFT)

    Ministry of Finance (MoF)



    Relevant Legislation/Regulation

    Constitution of Syria, 1973

    Law No. 23 of the Central Bank of Syria, 2001



    Supplementary Sources

    Creane, S., et al., "Financial Sector Development in the Middle East and North Africa," Working Paper 04/201, October 2004. Available from International Monetary Fund website. Accessed on August 13, 2008. (Creane et al 2004)
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