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KAI RYSSDAL: Wall Street was playing a game of wait and see today. Investors are waiting on two things. One is the Fed meeting next Tuesday. The other is earnings reports from big banks and brokerages that’ll come out next week. They’ll be another indicator of how badly the subprime crisis has spread.
As complicated as the banking system is in this country, imagine a place with no loans, no checks and no credit cards. Where the population is paid in cash. That was the Syrian economy just a couple of years ago. Now, Damascus wants to do business with the European Union. But before that can happen, the country has to modernize its financial system. Jennifer Glasse reports private banks are leading the way.
Jennifer Glasse: You still see big piles of cash being counted by machines in Syrian banks. But little by little, things are changing.
Syria is trying to modernize its banking system. ATMs have sprung up around Damascus and you can carry dollars around openly. That’s new. Syria’s authoritarian government used to prohibit Syrians from dealing in foreign currency — one way to control the population.
GEORGES SAYEGH: You have $100 in your bag? Four years ago, you were supposed to go to jail. Now we are making steps and steps and steps into an opening of the market, an opening of the economy.
George Sayegh runs a private bank. He left Syria 30 years ago to become a banker in neighboring Lebanon. He’s returned to run a private consortium of foreign-owned banks. He says private banks are stepping in where state-run banks have refused to go.
SAYEGH: We started personal loans. We started car loans. We started the mortgage, the housing loan. But still we need more steps to be done.
Time was, Syrians couldn’t get private bank loans. Homebuyers showed up at closings with enormous sacks of money. And many Syrians, mistrustful of the state-run banks, stashed their cash at home. But Syrians are catching on to the new banking system. Four years ago only about 8 percent of the population used a bank. Now it’s more like 25
percent. Bank customer Mohammed Ayubi loves the efficiency of private banking.
MOHAMMED BAKRI AYUBI [interpreter]: If I had my account at the commercial bank it would take 10 extra days to get my transfer. So, here it’s a lot, lot easier.
Private banks are introducing other things they think will make life easier for customers like Ayubi — checkbooks and credit cards, and Islamic banks for Muslims who’ve stayed away because their religion forbids earning interest.
The goal: to get all that Syrian money out from under the mattresses and floorboards and into a bank. But revamping the Byzantine central bank is proving difficult. Entrenched middle management accustomed to bureaucracy is resisting change. There were plans for a new stock market to be opened by now. Maybe next year.
There is some progress . . .
Like teaching employees to speak English. That will be a key skill to process international transactions. Opening up to English lessons and foreign banks signals a sea change for Syria. The economy stagnated under government control. Many here hope expanding banking reforms will spur economic growth.
In Damascus, I’m Jennifer Glasse for Marketplace.
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