Turkey’s central bank reversed a rule intended to limit demand for cash and gold, after facing a backlash from citizens ahead of a presidential runoff election on May 28.
(Bloomberg) — Turkey’s central bank reversed a rule intended to limit demand for cash and gold, after facing a backlash from citizens ahead of a presidential runoff election on May 28.
The strict regulation from Monday — a day after President Recep Tayyip Erdogan just failed to win another term in the first round of voting — was designed to defend the lira, which has weakened just over 1% this week.
It created confusion among banks and led some to stop providing cash advances or limit the use of credit cards.
Lenders are no longer required to hold low-yielding government bonds for customers’ gold purchases or cash advances taken out using credit cards, according to a letter sent to banks and seen by Bloomberg on Friday. The central bank declined to comment.
The monetary authority communicated the latest decision to all banks.
Many people in Turkey rely on cash withdrawals from credit cards to survive amid the country’s worst-cost-of-living crisis in two decades. Some have purchased gold to hedge against inflation.
The initial regulation required banks to hold government bonds equivalent to 30% of clients’ purchases of gold or jewelry. It was for customers whose card limits were above 50,000 liras, or about $2,500.
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