The new currency will be the same as the old one minus six zeros, Prime Minister Recep Tayyip Erdogan said on Thursday.
“We will launch a promotion campaign in the coming days,” Erdogan told a press conference, flanked by Economy Minister Ali Babacan and Central Bank Governor Sureyya Serdengecti.
“We have three and a half months for the campaign,” he said.
“Any questions that might arise in this period will be answered by the competent bodies and no questions will be left unanswered,” he says, adding that the promotion will continue after the new currency hits the streets.
Chronic inflation and financial crises over the decades hyperinflated the Turkish lira to the point that the smallest coin today is worth 25,000 lira ($0.01), while the biggest banknote is 20 million lira (about $13).
For many Turks, the multi-zero currency is a stain on national pride, symbolising economic failure. But a recent opinion poll shows many Turks are worried that the currency reform will be inflationary.
The country’s economy began
Erdogan brushed aside the fears, arguing the move will only strengthen Turkey’s drive to overhaul its economy.
“The (currency) reform is a concrete indication of our determination to bring down inflation and ensure economic stability,” the prime minister said. “We will never take a step that will contribute to inflation.”
After the reform, one New Turkish lira will be equal to one million Turkish lira – and, at current rates, the new currency will be worth 65 US cents, or 55 euro cents, at current rates.
Both currencies will be used in a transitional period between 1 January and 31 December 2005. The law also re-introduces the kurus, which disappeared from circulation more than two decades ago. One new Turkish lira will be equal to 100 kurus.
The country’s economy began its downward slide after a huge devaluation vis-a-vis the dollar in 1970. Turkey has been battling to rebuild its economy since 2001, when a banking crisis caused havoc in the economy, sent financial markets into turmoil and slashed half of the lira’s value against the dollar.
The country has since been making headway with a tight economic austerity programme, backed up by a $16-billion-loan from the International Monetary Fund.