Turkey launched a new currency Saturday by dropping six zeros from the old one, in a sign of progress in its decades-long struggle with inflation. But getting rid of old habits in a country where even a loaf of bread costs hundreds of thousands isn’t likely to be easy.
No major problems were reported after the new Turkish lira went into circulation for the New Year, although credit cards were unusable for about five minutes while the transition was made.
Bank machines were also distributing the new currency, but few on the street appeared to have made the switch. The old notes will remain usable for a year, but the Central Bank predicts they will largely be out of circulation by the end of February.
Harun Fakcioglu, who works at a shop selling nuts and cigarettes in Istanbul, said customers hadn’t started using the new money.
“That’ll be 1.5 million,” he said to a man who bought a bottle of cola. “People won’t spend the new money right away. At first they’ll be curious. But at least managing the books will be easier without the zeros.”
Under the new system, 1,000,000 Turkish lira, about 75 cents, is equivalent to 1 new Turkish lira — the price of about three loaves of bread. The jackpot in Turkey’s New Year lottery was announced Friday night in old lira — 15 trillion equivalent to $11.1 million.
The old currency boasted the world’s largest bank note — 20,000,000 lira, worth only about $15.
The move comes as the government has made important progress in reducing inflation, which ran in the double digits for decades.
Prime Minister Recep Tayyip Erdogan withdrew the new currency from a bank machine early Saturday and said he was happy Turkey had been rescued from “the shame” of the old system.
He later went grocery shopping with the new money, and received change that included kurus, the Turkish equivalent of a cent, which had been dropped years ago because of inflation.
Turkey is attempting to stabilize its economy as it pushes for membership in the European Union, which agreed last month to open membership talks with the mainly Muslim country. Turkey has implemented a $16 billion International Monetary Fund-backed austerity plan designed to help its economy recover from a crisis in 2001.
The country hopes the new currency will ease foreign investment. Introducing a new currency has been a Turkish goal for years, but the government was only able to move forward now that inflation is projected to run about 8 percent this year.
But there are challenges ahead. Turkish governments must avoid the type of excessive spending that was partly responsible for the inflation.
Erdogan spent Saturday quizzing citizens to make sure they understood the value of the new currency, as he handed them 5 new Turkish lira bills.
“How much is this worth in old lira?” he asked one woman.
Television channels and newspapers also explained the conversion to the public.
“The easiest formula,” explained the mass-circulation Hurriyet, “is say ‘new Turkish lira’ instead of ‘million.”’