Governor Adeeb Mayaleh said bank deposits rose four percent in the second quarter of this year compared to the first quarter.

“The Syrian pound is solid and the central bank’s reserves  are very big ... the liquidity in banks grew by 12 percent until the 5th of July this year,” he said.

“The banks witnessed some withdrawals which were caused by unjustified fears from the events that is happening but then the deposits movement returned to normal,” he said.

Businessmen and diplomats said Syria’s economy faced currency pressures as a result of protests against President Bashar Al-Assad’s rule, which began in March, and that could deplete the country’s reserves. 

“Nobody denies that the latest events formed immense pressure on the exchange rate but the rate remained stable during the crisis,” Mayaleh said.

The central bank took monetary measures in May aimed at supporting the local currency and attracting capital. They included raising the interest rate on deposits by 2 percentage points and halving banks’ reserve requirements to five percent with possible cuts to zero percent.  

Total assets in Syria’s banking sector amount to 2 trillion Syrian pounds ($43 billion). Syrian state-owned banks hold around three-quarters of the assets. 

“Reserves during the second quarter of 2011, during the crisis, grew by 4 percent compared to the first quarter which signifies the strength of the banking sector,” he said.

Mayaleh said many banks have sent requests to open new branches in different provinces in the country.

Around 14 privately owned banks and six state-owned banks operate in Syria. Bankers say Syria, a country of 20 million people with one bank branch for every 45,000 people, is ready for more banks.

In neighboring Lebanon, there is a branch for around every 5,000 people and in Jordan for every 10,000 people.

The central bank’s reserves stand at $18 billion but sources said they have been falling at the rate of $70-80 million a week as the central bank pumps foreign currency to stop falls in the Syrian exchange rate on the black market. 

Mayaleh said the exchange rate in the black market was “not real” and the volume of transaction in it was low.

The official exchange rate stands at 47.6 pounds. 

He said the inflation rate had dropped to 3.99 percent by May 2011 from 4.35 percent the same time last year.

Pro-democracy protests have shaken confidence in Syria. In a speech in June, President Assad described “weakness or collapse of the Syrian economy” as a major threat.