A Turkish custom of giving gifts of gold–either in the form of jewelry or coins–to celebrate such occasions as weddings and births, has grown in popularity popular over the past decade as Turkey’s inflation rate has climbed above 70%.
As a result, the country’s banks have been inspired to go for the gold as they try to convince people to turn over those precious gifts and exchange them for currency to lessen the nation’s current-account deficit.
Bloomberg reported late Monday that the campaign is targeted at gift-givers. Banks are offering “golden age” accounts and products such as gold gift checks in an effort to convince Turks that such gifts are preferable to the recipient than those shiny pieces of metal.
We’re not talking about gold dust here. This is the mother lode–estimates are that Turkish citizens are holding onto somewhere in the neighborhood of $302 billion in the precious metal. The drive seems to be working, too; The country’s central bank said that gold-based deposit accounts have jumped 15% this year through the end of July, three times the increase in standard savings accounts.
Customers bring their gold to the bank, which then gives them Turkish lira based on the weight of their deposit that they can either take out as a loan or withdraw as cash. The bank can then retain or sell the gold, putting the precious metal back into the economy.
The World Gold Council estimates there are some 5,000 metric tons (5,512 tons) of gold trinkets floating around Turkey–more than Ireland’s entire GDP. According to Erdal Aral, deputy chief executive officer of Isbank, if Turkey can bring a chunk of that hoard into its banking system, the country can cut down on its gold imports and stop borrowing so much externally as well.