Currency Reform In the Land of Billionaires

[Zhukov]

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 apartment.

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."

http://www.nytimes.com/2004/12/30/international/europe/30turkey.html

 

[NATO AIR]

that's cool zhukov, thanks for posting that.

s. korea needs to do the same with their bloated currency, nothing like spending thousands on a candy bar.