ANKARA (Reuters) - Turkey’s finance minister has announced a new scheme aimed at converting billions of dollars worth of households’ gold into lira, and bringing it into the country’s banking system.
Nureddin Nebati announced the plan to investors during a visit to London, where he added that Ankara hoped 10 percent of the gold held by Turkish households, worth an estimated $250bn, would be converted into the country’s currency, two people told the Financial Times.
“With this package, we will put under-the-mattress gold, which is estimated at around 5,000 tons, into the banking system. It is equivalent to about $250-$350 billion. A certain part of that amount will support the Central Bank’s foreign currency needs,” he said during a press conference.
The minister added that 30,000 gold shops would be involved in the scheme, while five gold refineries would convert any gold jewellery obtained from Turks into gold bullion in order to add it to central bank reserves.
The lira has been broadly stable since the start of the year following a bruising 44 percent slump in 2021, when the central bank slashed its policy rate in line with an unorthodox policy driven by President Recep Tayyip Erdogan - despite soaring inflation.
The lira hit a record low of 18.4 to the U.S. dollar in late December, but rebounded after state intervention and Erdogan’s announcement of a scheme to boost lira deposits by protecting them against depreciation.
The volume of deposits under the lira protection scheme now exceeds 290 billion lira ($21.4bn), the government says.
However, some analysts remain skeptical that the deposits will provide a solution to the population’s mistrust of the lira.