Monetary and banking system of Turkey

Although Turkey is a very old country, lying across between the Near East and the West, it has only quite recently acquired a modern system of its money and banking institutions. For the many centuries which preceded the Revolution of 1923 and the institution of the program of Westernization, the prerogative of coinage was exercised by the ruling Sultans as much, it would appear, as a fiscal device for meeting the emergency needs of the royal treasury, as a convenience for the business community. The country's modest banking needs were: supplied by merchants, exchange dealers and casual money lenders. Banking as a separate undertaking did not make its appearance until the middle of the nineteenth century and then legally as a result of the fiscal emergencies in which the Ottoman Rulers bartered banking monopolies and the privilege of issue for the support of the country’s credit abroad. The recipient of the exclusive right of note issue was the British-French owned and operated Osmanli Bankasi which for many years was the country's leading bank. Since 1923 the country has experienced a growth and expansion in the banking structure as the result of the undertaken economic development program which has no parallel in modern history. A major part of this growth has been the consciously planned result of the relative vast reconstruction program through which the government is attempting to modernize the Turkish economy and to exploit its latent natural resources. At the center of this new financial revolution is the Central Bank of the Turkish Republic. Surrounding it are a number of government owned and operated quasi-public institutions charged with the responsibility of carrying out the State's program of industrialization, and the purely private banks. While considerable capital has been obtained from abroad and from domestic saving they have been a substantial part of these investment sources and have not been sufficient to meet the needs of the reconstruction program. During the past few years an increasing reliance has been placed on the issue privilege of the Central Bank, causing a serious decline in the purchasing power of the Turkish Lira. The recovery of the existing inflation in the country would appear to depend upon the by no means certain success of the economic development program. The future of the new banking community would also appear to depend upon the success of this program.Arts, Faculty ofVancouver School of EconomicsGraduat