On adopting policies centred on stability and economic recovery
How will banks recalibrate foreign exchange (FX) pricing and liquidity management after the pound partially retracted from its April 2025 peak?
AHMAD JAMAL ZIDAN: The FX market is clearly shifting towards more market-driven pricing. Banks have already begun adapting their models to reflect real supply and demand dynamics rather than relying solely on administered rates. The central bank should be more active in liquidity management – selectively injecting foreign currency, conducting direct FX sales and smoothing volatility without burning through reserves. To narrow the gap between official and parallel rates, policymakers need to gradually converge the official rate towards the market rate in a transparent and rules-based manner. Full liberalisation need not be immediate but the direction must be clear. With the currency stabilising, banks can re-expand various trade finance products such as letters of credit and trade loans at more competitive pricing, ideally sup-ported by central bank intervention lines. Remittance inflows, diaspora funds and external liquidity should be incentivised as they are essential to rebuilding reserves and deepening the market. In the interim, money exchangers will continue to play a role but the objective should be to gradually re-channel their volumes back into supervised banking channels.
What changes to cross-border payments and cor-respondent relationships are achievable in 2026 with the termination of sanctions regulations?
ZIDAN: Sanctions relief is a turning point, but it will be a gradual reopening rather than an instant reset. Many correspondent banks remain cautious and will only re-engage once there is clarity on regulatory consistency and compliance culture. The immediate priority is restoring settlement access in US dollars and euros. Even with legal clearance, operational friction remains high, so a phased roadmap is essential – starting with humanitarian flows, remittances and trade finance – where the economic impact is highest. For this to happen, Syrian banks must demonstrate credibility. That means upgrading core payment infrastructure, reinforcing governance and investing in compliance talent. Enhanced due diligence, transaction-monitoring tools and clearer regulatory guidance are necessary to provide foreign banks with the confidence they need. A joint platform for dialogue between local regulators and international counterparts would help in aligning expectations. The goal should be to move step by step – prove discipline on lower-risk corridors – and then graduate to more complex flows. Caution is understandable but discipline and transparency can accelerate reintegration.
To what extent should lending strategies pivot to-wards small and medium-sized enterprises (SMEs) and working-capital lines?
ZIDAN: SMEs are central to recovery following the currency shock. However, many of them are still carrying liquidity strain, weak financial reporting and impaired collateral. With stability gradually returning, banks should shift from purely defensive lending towards productive deployment, but selectively and based on real data. Pricing must be risk based, not one sized fits all. Stronger SMEs with credible recovery plans should get preferential rates, while higher-risk borrowers pay more. Longer tenors and phased repayment schedules will be critical, especially for working-capital lines. Collateral rules can begin to ease, moving from rigid asset coverage towards hybrid or cash-flow-based models for better performers. Proactive restructuring tools, such as maturity extensions and grace periods, should be utilised early to prevent defaults rather than react to them. Re-engagement cannot utilise a lend-and-forget policy. Financial institutions should monitor borrowers closely, offer advisory support, link them with development programmes and, subsequently, accompany viable firms through their recoveries.
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