Turkey is likely to experience problems when it introduces a new currency next year, bankers and economists fear.
Turkey is due to introduce the currency, the new Turkish lira (YTL), on January 1. Six zeros will be knocked off the old currency in a move to ease accounting practices, reduce strains on payment systems and create psychological conditions to curb inflation forever.
But the YTL is likely to produce glitches, bankers and economists say. They believe the country may encounter difficulties similar to the Y2K problem that had threatened to play havoc with computer systems at the beginning of the millennium.
About 20% of Turks are unaware of the planned currency change, according to a central bank survey.
The introduction will be complicated by the old and new currencies running side-by-side throughout 2005, while the old lira is phased out. Shops and department stores have begun to display prices in both currencies, which look similar.
The greatest confusion is expected to take place at fast-turnover retail stores, such as supermarkets and hypermarkets, bankers say.
“It is likely that the retailing sector will live through serious chaos during the first week to 10 days,” Sükrü Binay, vice-governor of the Central Bank of Turkey, told a conference in Istanbul in October.
The changeover has preoccupied the information technology and accounting departments of banks and most companies and government offices for several months.
According to some economists and IT specialists, Turkish companies and institutions will have to spend at least $500m on new software to accommodate the transition and the costs are likely to be passed on to consumers.
“Banks, municipalities, the nation’s tax offices, the social security organisation, hospitals, the postal administration, the state telecommunications concern and other big government organisations and private sector companies will have to change their software,” said Timur Han Gur, a lecturer in economics at Ankara’s Hacettepe University.
While the ultimate aim is to stifle inflation, the new currency could spark a wave of price increases, shopowners fear.
Mounting oil prices are putting pressure on costs and raising the spectre of creeping inflation once again in the country, which has been devastated by high inflation over the past 30 years.
Year-on-year wholesale prices stood at 15.4% at the end of September, the highest level in months.
Bankers say that coin shortages are likely, despite pledges from the central bank to supply 1.2 billion coins to the market in the new year. Retailers are predicting that up to 30% of all money used in the new year will be coins. In the past, coin usage was only 1% of all money used.
The Istanbul Stock Exchange (IMKB) is expected to face a major problem when the share prices of the 251 companies traded will fall below 1 kurus (1/100th of a lira) after the changeover.
“It is obvious that the management of the IMKB must prepare new regulations to handle this situation,” Mr Gur said.
