Islamic State Bans Trading of New Syrian Regime Paper Bills

  • Militant group says it's acting to ``strangle'' Assad regime
  • Jihadists started issuing its own currency in August

Trading of the Syrian regime’s newly printed 500 and 1,000 pound bills will be banned in areas of Syria that are under Islamic State control starting in mid-October, according to a news agency associated with the militant group.

The move is an attempt to economically “strangle” the regime of Syrian President Bashar al-Assad, which printed the “worthless” bills to pay salaries to its employees, an Islamic State official was quoted as saying by the Amaq news agency on Sunday.

Syrian central bank Governor Adib Mayaleh said on June 30 that new banknotes would be put into circulation to replace about 70 billion pounds worth of old and torn versions that were withdrawn, according to the official Syrian Arab News Agency.

The move wouldn’t affect inflation levels or the currency’s exchange rate, Mayaleh said at the time. The new notes didn’t feature the image of Hafez al-Assad, the current president’s father, who has traditionally been featured.

In late August Islamic State touted the release of its own gold dinar coins, in a move it said would break the shackles of “the capitalist financial system of enslavement, underpinned by a piece of paper called the Federal Reserve dollar note.” Islamic State’s media wing, al Hayat, produced an hour-long video to feature the new coins.

Islamic State’s policy making Shura Council in 2014 ordered its Beit al Mal, or Treasury, to start minting the coins, which come in several denominations made of gold, silver and copper. The group didn’t explain where the coins were being minted, how they would be distributed, or a mechanism for replacing currencies circulating in the territory the group occupies in parts of Iraq and Syria.

Residents in Mosul, Iraq’s second largest city, which was occupied by Islamic State militants in 2014, on Sunday said the new coins haven’t yet circulated in the city but some are available in the stores of the city’s goldsmiths.

“You can buy them with the price the group has set according to the current value of gold,” said one resident, who asked not to be identified out of concern for his safety.

Before it's here, it's on the Bloomberg Terminal.