History of Turkish Money

Turkish money has seen many fascinating but difficult changes in its history.

Originally, the lira was a gold coin that was first introduced in 1844, before which the Ottoman Empire used the `akce` that was replaced by the `kurus` (piaster) and the para as its part. The `kurus` was originally a large silver coin that was reduced in size later on and was one hundredth of a gold lira. Each `kurus` was equal to 40 para.

Soon paper money was introduced by the Imperial Ottoman Bank that was valued by the help of `kurus` with denominations ranging from 5 to 5000 `kurus`. The lira soon took over the `kurus` in mid 1870s and had denominations of 5 to 1000 liras. Further, there was the 50,000-lira banknote that helped to solve the problem of small money like 1 and 2.5 `kurus`.

Turkey soon abandoned the gold standard by the First World War, and by the early 1920s the gold lira could be equated to about nine liras in paper money. Soon the older Imperial Ottoman paper liras were again replaced with the Turkish lira in the form of medium sized silver coins. Notes were also introduced in the denominations of 1, 5, 10, 50, 100, 500 and 1000 lira. The notes then carried the picture of the Turkish National hero, Mustafa Kemal Ataturk, but following his death in 1938 new notes carried the picture of President Ismet Inonu. However, in the 1950s the picture of Ataturk reappeared on the notes.

The sun set on the Turkish currency from the late 1970s, when chronic inflation, coupled with recessions in 1994 and 1999, as well as a banking crisis in 2001, saw the old Turkish lira depreciate heavily against other currencies. In 1966 the old Turkish lira was worth nine liras for every one US dollar, for instance. By 2004, you had to pay 1,350,000 lira for the same American dollar!

Inflation was so bad (up to 70% at times) and the exchange rate so dire that new notes with bigger denominations had to be introduced almost every two years from 1981 to match prices. The Guinness Book of Records ranked the lira as the world’s least valuable currency in 1995, 1996 AND 1999 through to 2004.

Finally, the Turkish government had to act. As well as putting in place a plan to tackle inflation (now standing at 10.1% at the end of 2008, predicted by the Central Bank of Turkey to be between 5.4 and 8.2% in 2009) and putting more controls into the banking sector, they also decided to reissue their currency.

And on January 1 2005, the New Turkish Lira - to become simply Turkish Lira four years later - was born.