Turkey appears to be backing away from so-called fiat money and pushing gold as the currency of choice in international commerce – and preparing for it, of course. of AL Monitor has the story:
Turkey’s central bank, in a fundamental shift in its reserve policy, is stocking gold and scaling back on foreign exchange after many years of keeping gold reserves at a fixed level and trying to boost foreign exchange. In the first week of April alone, the central bank’s gross foreign exchange reserves declined to $83 billion from $84.7 billion the previous week, while gold reserves stood at about $25.3 billion.
The unprecedented increase in gold reserves propelled Turkey to 10th place in terms of gold reserves in February. According to the World Gold Council, Turkey had 546.8 tons of gold that month, compared to 116 tons in September 2011.
The goal?
In a sign that Turkey will continue to stock up on gold, President Recep Tayyip Erdogan on April 17 argued that international loans should be based on gold rather than dollars. Speaking at an economic gathering in Istanbul, he remarked, “Why do you have to make the loans in dollars? Let’s base the loans on gold. We need to rid states and nations of exchange rate pressure. Throughout history, gold has never been a means of pressure.” Erdogan also said that he had made the suggestion to International Monetary Fund officials at a G-20 meeting.
Ankara’s desire to boost the use of gold pertains not only to borrowing, but also to trade. This meshes with its efforts to promote interest-free banking, where lending systems are based on gold. Some, however, see more covert motives behind Turkey’s stocking on gold.
Interest free banking is a result of the Islamic prohibition on interest. And there’s more:
In an April 17 article, Hurriyet’s economy pundit Ugur Gurses reported that last year the central bank withdrew all 28.6 tons of gold it was keeping at the US Federal Reserve, moving it to the Switzerland-based Bank of International Settlements (BIS) and the Bank of England. According to the report, at the end of 2017, Turkey’s gold reserves totaled 564.7 tons, including 375.4 tons at the Bank of England, 18.7 tons at BIS, 33.7 tons at the Turkish central bank and 136.8 tons in the central bank’s account at the Istanbul stock exchange.
Some interesting moves by Turkey. I’ve never quite understood the fascination with gold myself, but it sure seems to becloud some people.
