Turkey to Shift to a One-in-a-Million Currency
By SUSAN SACHS
Published: December 30, 2004
 STANBUL, Dec. 29 - Everyone here was a millionaire, but those days will soon be over.
Beginning
Jan. 1, Turkey will eliminate the last six zeros on its currency,
bringing an end to the days when Turks could drop a hundred million for
a week's worth of groceries and spend a few billion to furnish a simple
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The
million-lira bank note, the equivalent of about 74 cents, will become a
one-lira note of the same value. The 20 million-lira night out at the
movies, including popcorn, will instead cost 20 new Turkish liras, and
so on. Officials have talked about changing the bloated lira
for a decade. But they held back in the face of a crippling financial
crisis in 2001 and, until recently, stubbornly high inflation. "What
they're saying now is that it's not funny money any more," said Sevket
Pamuk, a professor of economics at Bosporus University here. "It's
symbolically important." Annual inflation at one time ran
about 140 percent. Adding zeros to the bank notes was one reaction,
although it made for mind-bending calculations for visitors converting
currency. The economy has improved lately. This year's inflation
was about 12 percent, according to the Central Bank. For 2005, the
government has set its target inflation rate at 8 percent. Changing the
currency is meant to send a message of confidence to the public, the
financial markets and foreign investors. "They are investing in
their own credibility," said Murat Yulek, an economic consultant in
Ankara. "They are tying their own hands and saying, hey, we're
committing ourselves to not running a loose monetary policy." Outside
of its psychological effect, the change should not have any effect on
the overall Turkish economy or exchange rate, he said. Over the
last few years, even the poorest Turks could count themselves as
billionaires. The minimum wage is about 400,000,000 liras a month,
making the basic yearly salary for the lowest paid worker 4,800,000,000
liras. But all those zeroes did not fool anyone. "It
will be very good to use money that seems closer to what people use in
Europe and America," said Gunay Kudaloglu, the manager of a fruit and
vegetable stand in Istanbul. "You know, one lira will be like one euro.
It's more normal. This wasn't normal." Both old and new liras
will be in use for the first year, although economists expect the bulk
of the old bank notes to be exchanged by the spring. More than
13 quadrillion worth of lira - that is 13 with 15 zeros - are now in
circulation, according to Ilkier Bayir, head of the issuing department
at the Central Bank. The new notes have the same pictures of
Ataturk, the first president of modern Turkey, on one side. Turkish
landmarks and antiquities are on the other side. Central Bank
officials said they had received complaints about the Ataturk portraits
for the new currency and about the choice of buildings and
archaeological sites portrayed. But they said it would be impossible to
please everyone. "You put a mosque, they criticize," Sureyya
Serdengecti, a bank official, said during a conference in early
December. "You put in the ruins of Ephesus or something from the
ancient Greek or Roman empires, and they criticize that, too." The
government has not yet decided what it will do with the estimated 1,600
tons of old liras that will be exchanged for new ones. Most countries
in similar situations have buried or burned their bank notes. The
Central Bank has commissioned a research institute to come up with
alternatives, which could include using the notes in road-paving
materials.
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