Re-denomination was not only a zero
dropping and new coin minting operation but also a significant milestone in
Turkey. Before the currency reform, multiple zeros had posed several
difficulties in expressing monetary values, transactions, bookkeeping and statistical
records, data processing software, payment systems, price labels etc. So,
removing six zeros from national currency became a technical and psychological
need in Turkey.
In the first phase of the currency reform, six zeroes were
removed from the national currency and the prefix “New” was added to the
currency’s name as of January 1, 2005. At the beginning of the reform, it was
also decided that in the second phase, the prefix “New” used during transition
period would be removed and traditional currency name, “Turkish Lira” would be
reverted back. For that stage of the reform, the Council of Ministers took the
decision and the operation started on January 1, 2009.
This paper focuses on the currency reform in Turkey and
lessons from re-denomination and Euro changeover in different perspectives. The
first section of the paper deals with two stages of the currency reform the
background, other countries’ experiences, legal, financial and technical
aspects of the operation and the tasks of different institutions namely the
Central Bank, Minister of Finance, Ministry of Industry and Trade, Under
secretariat of Treasury, Banks and Credit Institutions, Capital Market Board,
Turkish Statistical Institute, Banking Supervision and Regulation Agency.
The second part discusses organizational and communicational
aspects, the physical changeover and its effect on banking and retail sector,
the withdrawal of legacy notes and coins and lastly the impact of the operation
The benefits of the operation and the general evaluation of
the reform are summarized in conclusion.
JEL Classification: P41,
O24, N14, P2.