ANKARA, 26 October 2004 — Turkey yesterday unveiled the much-awaited design of its new currency, just two months before it goes into circulation, in what officials describe as a major step in the country’s battle against chronic inflation.
The new Turkish lira - or YTL, as it is called here — comes into effect on Jan. 1, 2005, scrapping six zeroes from the current money, which has been a source of national shame as a symbol of economic failure and 30 years of hyperinflation.
The smallest coin today is worth 25,000 lira (0.01 dollars or euros), while the biggest banknote is 20 million lira ($13 or 10 euros). “With the YTL, our country’s longing for low inflation is coming to an end - with the YTL, our currency’s longing for prestige is coming to en end,” Turkish Prime Minister Recep Tayyip Erdogan told a ceremony introducing the new currency, attended by Cabinet ministers and financial authorities.
After the reform, the banknotes in circulation will be one, five, 10 and 2O YTL, which correspond to today’s one million, five million, ten million and 20 million notes and which will be almost identical in design.
There will also be two newcomers: 50 YTL and 100 YTL, which, as is the case with the other notes, will carry portraits of the country’s founding father, Mustafa Kemal Ataturk, on the front and pictures from Turkey’s cultural and natural heritage on the back. The new notes also introduce several anti-counterfeiting measures.
The reform will also re-introduce the kurus, which disappeared from circulation more than two decades ago. One YTL will equal 100 kurus. The biggest coin will be one YTL and the smallest one kurus. The new coins will all have a crescent and a star - the symbol on the Turkish flag - on one side and a portrait of Ataturk on the other. “We are launching a money reform in Turkey. It is already clear that the Turkish people, hungry for stability after years of inflation, will adapt easily to the YTL,” Economy Minister Ali Babacan said.
He brushed aside fears that inflation may rise as tradesmen round off amounts upward with the new currency, as was the case in some EU countries after the adoption of the euro. “The smallest currency will be one kurus rather than 25,000 thousand liras. That will in fact decrease the already rampant rounding off of figures,” Babacan said.
Both the new and old currencies will remain in circulation during a transition period until Dec. 31, 2005, when labels will carry prices in both denominations. Central Bank Governor Sureyya Serdengecti said distribution of the new notes and coins to banks would begin in December and that the transition would be up to 95 percent complete by February. The government last year announced plans to knock six zeroes off the embattled currency as it dramatically pulled down inflation under an IMF-backed austerity program. The Turkish economy began its downward slide after a massive devaluation against the dollar in 1970.
The current program, backed by a $16-billion IMF loan, was signed in 2002 after turmoil in the banking sector plunged the economy into its worst recession since World War II. In exchange for the aid, Ankara implemented far-reaching reforms that helped stabilize its banking system, decrease inflation and boost growth.
The program expires in February 2005 and is expected to be followed by a new three-year stand-by deal, currently under discussion between Turkish officials and a visiting IMF team. Annual inflation, which surpassed 100 percent in the mid-1990s, now stands at about nine percent.
