The Turkish government would like to implement a strategy to induce its citizens to hand over their gold to support the value of the national currency, the lira. But according to some, the country would have been much better off if it had simply embraced Bitcoin (BTC).
According to an article in the Financial Times, the Turkish government has entered into agreements with five gold refineries for the conversion of gold jewelery handed over by citizens into bullion which will be added to the central bank’s reserves.
These agreements are in addition to a collaboration with more than 30,000 gold shops which according to the Turkish Minister of Finance, Nureddin Nebati, will play a central role in the system. This is according to anonymous sources quoted by the Financial Times, who were present at a meeting with foreign investors in London this week.
According to the same sources, the finance minister said the government hoped that 10% of the estimated $250 billion in private gold held by the Turks would be handed over under this program.
The project was briefly described in a Turkish central bank press release in December, saying it was intended to “support financial stability”.
Commenting on the subject, George Kikvadzeco-founder of blockchain infrastructure provider Bitfuryat declared on Twitter that it would have been “much smarter” for the Turkish government to embrace Bitcoin.
If Turkey had embraced BTC, “its citizens and the Central Bank would have been sitting on tens of billions in assets by now,” Kikvadze added.
But even though the government is reluctant to the idea, Turks have already embraced bitcoin, according to several reports.
For example, mainstream outlets like the Wall Street Journal have repeatedly reported how Turks are hoarding bitcoins and stablecoins like Tether (USDT) to escape lira depreciation. And according to a video report for the same newspaper from Istanbul, Turkey’s largest city, cryptocurrency swap offices and related advertisements can now be seen.
This news follows a visit by the pro-bitcoin president of El Salvador, Nayib Bukeleto the Turkish President Recep Erdoğan in January. Prior to the visit, Bukele tweeted “First of all, greetings from El Salvador, the land of bitcoin, to all of Turkey.”
The visit has fueled hopes that Erdogan will take inspiration from El Salvador, but no related news has emerged from the meeting so far.
The troubled lira and the cryptocurrency law
In December last year, President Erdogan told a press conference that the government had finalized the country’s first cryptocurrency bill and was ready to be sent to parliament for formal approval.
However, it remains impossible to determine whether the bill is good or bad news for crypto users in the country, given the president’s previous statements that he has “absolutely no intention of endorsing cryptocurrencies.” “.
Turkey’s currency lost 44% of its value against the US dollar last year, but stabilized this year after new measures were introduced to halt the currency’s free fall. These measures provide for compensation on losses on lira deposits if their value against “hard currencies” such as the US dollar exceeds the bank’s interest rate.
Exchange rate of the US dollar against the Turkish lira since 2021:
In a note from analysts of Goldman Sachsthe measure was described as “very significant”, although it is still “unlikely to structurally stabilize inflation or the exchange rate”, indicates CNBC.
And while the measures seem to have stabilized the exchange rate of the lira against the dollar, inflation remains galloping in Turkey, reaching an impressive figure of 48.7% in January.
“What happens next will shed light on the government’s unconventional approach to interest rates: Will the availability of goods increase or inflationary expectations worsen?” request Mohamed El-Erianthe president of Cambridge University Queens’ Collegeto his Twitter followers after the publication of this figure.
“Bitcoin,” one follower wrote in response.
As of now, it remains unclear whether Turkey’s previously hostile attitude towards Bitcoin and other crypto-assets will remain, or whether the country will adjust its stance. What is clear, however, is that it is becoming increasingly difficult to prevent Turkish citizens from using Bitcoin to preserve their wealth.
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