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Foreign Exchange

Vintage year gives Turkey a grip on inflation

On the first day of next year Turkey will stop being world champion for the number of zeros in its currency. In January the Assembly passed a law authorising the government to redenominate the lira by throwing away six zeros from the currency. The lira became bloated over decades of endemic inflation, which made every Turk a millionaire. The minimum wage is TL303 million ($230). Since 1980 the central bank has been obliged to issue new banknotes every two years.

"Turkey is the only country in the world with a 20,000,000-lira banknote," says Ali Babacan, the minister of state for Treasury, addressing the Assembly. "You will also remember the case of the tourist who got a fine and fainted when he learnt the amount."

The profusion of zeros in Turkish accounts has caused problems in SWIFT, the international credit transfer system between banks. Special calculating machines have had to be manufactured for Turkey, where a quadrillion (one followed by 15 zeros) became familiar to everyone – not just astronomers and mathematicians.

Making the lira more respectable has come within sight because the economy, guided by the IMF since 1999, has been doing remarkably well.

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