Turkey's government, working to reduce a current-account deficit soaring to nearly 10 percent of gross domestic product and high inflation, aims to coax citizens into storing their vast gold holdings in the nation's banking system.
Cutting down on its budget deficit is seen as essential to protect the nation's red-hot economy -- growing at about 8 percent annually -- from inflation and falling confidence in the lira, the country's currency, the Wall Street Journal reported Thursday.
Increasing the banking system's gold holdings would help lower the country's current-account deficit, economists said.
Buying and storing gold is a traditional form of saving for Turks, but the government is considering starting interest-bearing gold deposit accounts. Participants would be free to withdraw their holdings.
We are increasing the quality of the reserves by increasing our gold reserves, said Erdem Ba?ç?, the governor of the nation's central bank, speaking at the Gold and Jewelry Summit in Istanbul.
The total gold reserve at the Turkish banks rose to $8.67 billion by yearend 2011, Hurriyet Daily News said. The central bank holds nearly 206 tons of gold, worth almost $11 billion. Ba?ç? said nearly 87.2 percent of these reserves come from Turkey's lenders for required reserve ratio.
Ba?ç? said the central bank will maintain a policy of controlled tightening until the medium-term goal of 5 percent inflation is reached, adding that the bank will take care not to damage the country's banking as it seeks to restrain lending growth and slow inflation. Turkey's consumer-price inflation was 10.4 percent in February.
The total volume of gold savings kept in (residences) is nearly $300 billion, estimated Hakan Ate?, general manager of Denizbank, also speaking at the summit.