Good as gold: Turkey uses bullion to stabilise its economy
By GCRU Gold News on Monday, June 4 2018, 00:37 - Permalink
Turkey’s economy has been in a tailspin with an inflationary currency, but the country is using something rare to help stabilise itself: gold.
In late 2011, Turkey started to allow commercial banks to use gold instead of the Turkish lira for their required deposits at the central bank. These deposits are known as reserve requirements and help ensure that the banks are capitalised.
Over the past six-or-so years, Turkey’s central bank has accumulated an additional 400 metric tonnes of gold.
However, it is also worth remembering that the government does not own these additional gold reserves. They are the assets of the commercial banks and/or those of the investors who deposited their bullion with the financial institution.
That in turn means that private investors have the choice to get their gold returned to them. It’s basically the same as someone taking cash out of a deposit account. It is also true that everyone taking their cash out would likely cripple a bank.