ISTANBUL As European leaders are applauding the successful introduction of the euro in 12 countries, officials in Turkey fear lifetime savings of millions of Turks could be wiped out because of the switch.
For decades, millions of Turks have been hoarding their savings in German marks, often in makeshift safes at home or in their mattresses, as a hedge against losses from double-digit inflation and the notoriously weak Turkish lira.
Finance officials believe Turks may hold up to 25 million marks (approximately $11 million) in cash, and they worry thousands of people, especially those living in rural Anatolia, could see their savings evaporate when the German currency ceases to be legal tender after the switch to the euro is finalized at the end of next month.
Europe’s central bankers fear that a staggering $43 billion worth of German marks roughly a third of the currency in circulation is stashed away in Eastern Europe and Turkey, and could affect the strength of the euro if the people there decide to convert the marks into proven U.S. dollars instead of the fledgling euro, according to a London Daily Telegraph report.
The German mark has long been the currency of choice for millions of people in Turkey, Poland, the Czech Republic and Estonia. The Yugoslav republic of Montenegro as well as Serbia’s internationally administered province of Kosovo use the mark as their currency.
The Turkish central bank has undertaken a massive education program in recent months by distributing fliers on the euro to bank branches across the country and sponsoring television advertisements produced by the European Union, which refer to the euro as “your currency.” Turkey is not yet a member of the European Union.
“I became aware of the change through my bank,” said Nejat Kalavas, 52, who spent 17 years working as a truck driver in Germany and now lives in the Istanbul suburb of Bostanci. “I took dollars in August. But I know many people like me who hold marks and do not use the banks. They do not trust them.”
The deutsche mark became the currency of choice for millions of Turks, like Mr. Kalavas, who moved to Germany in the 1960s as the German economic miracle took hold after World War II. The mark was the first foreign currency many Turks had ever encountered, and its stability and convertibility across the Balkans made it a preferred savings vehicle, held alongside the gold rings, bracelets and watches many families hoard.
More than 2 million Turks now live and work in Germany, and their remittances to home villages and towns are an important source of hard currency. People with relatives currently living in Germany should become informed of the changes and the value of the euro. But observers worry the older generation that worked in Germany in the 1960s and ‘70s and came back to Turkey to be with their families may not be well-informed about the new currency.
“I know the government has been making an effort to inform everyone about the euro,” said an economic analyst at a Western embassy. “But it’s just going to be incredibly hard to find all these rural people who have had their deutsche marks stuffed in the mattress for decades and convince them the money won’t be any good come March 1.”
Turkish banks last year automatically converted deutsche mark accounts to euros without any cost to the customer. But many people chose to have their accounts changed into dollars because they don’t understand the euro or lost confidence in the new currency as its value eroded by a quarter against the dollar over the past two years.
Cash-strapped Turkish banks more than a dozen have been taken into government receivership are latching onto the euro conversion as an opportunity to pull more cash into the system from people’s home safes. Economists believe up to 4 billion marks ($1.8 billion) have entered the banking system over the past year as a result of the euro conversion, while vast sums remain outside the system.
In modern shops in Istanbul and Ankara, most consumer goods are valued either in marks or dollars, although merchants must ring up the price in Turkish lira, which trades at nearly 1.5 million to the dollar. Rural residents of Anatolia use the mark to trade in livestock or barter for big-ticket items, such as farm equipment or automobiles.