Devaluation Research Papers - Academia.edu (original) (raw)

The problem of money, which was inherited from the Ottoman Empire to the Republic of Turkey, began in 1914 with the start of the First World War (WW1). Paper money, which was printed in 1915, continuously depreciated until 1929 (Aral,... more

The problem of money, which was inherited from the Ottoman Empire to the Republic of Turkey, began in 1914 with the start of the First World War (WW1). Paper money, which was printed in 1915, continuously depreciated until 1929 (Aral, 1944, pp.260-272). Government had took various measures since 1929, and these measures were merged together by the Law no. 1567 enacted on 15 February 1930 (Resmi Gazete, 25, February, 1930). Turkish Lira for the gold cover was abandoned and the value of one Sterling was accepted as 1.030 kuruş. Turkish currency indirectly linked to the gold by means of Sterling. However, devaluation of Sterling came in September 1931, and Turkey chose the French Franc as the base currency. However, France abandoned the gold standard in 1936, and Turkish currency lost her convertibility.
Turkish Government stated in an official regulation that the Turkish Lira would continue to be the gold equivalent on 26 September 1936. This relative system did not continue much and the WW2 began in 1939. With the Law no. 3974 dating January 6, 1941, the Turkish currency was officially relinked to Sterling (Resmi Gazete, 15, January, 1941). One Sterling officially started to be sold from 520 kuruş and bought from 524 kuruş at Central Bank of the Republic of Turkey. However, Sterling had different values in the money market depending on the type of operation. After 1939, there happened no interference to the value of the Turkish currency until 7 September 1946.