Turkish government officials and economists are urging citizens to move physical gold holdings from private homes into the country’s formal banking system. According to Finance Minister Mehmet Şimşek, Turkish households currently hold approximately 5,000 tons of gold outside the mainstream financial system, a total valued at about $600 billion by the Governor of the Central Bank of Turkey. President Recep Tayyip Erdogan has stated that these "under the pillow" savings do not benefit the national economy while remaining idle.
The practice of holding physical gold is a long-standing tradition in Turkey, where it is commonly gifted at weddings and major milestones. Economists note that Turks have historically used gold as a hedge against the country's volatile economy. Turkey currently faces one of the world's highest inflation rates, which is reported to be approximately 31% annually. Because gold is less volatile and prices have reached record highs, many citizens view it as a safer alternative to the Turkish lira.
President Erdogan has attempted for several years to persuade citizens to deposit their gold, stating in a 2023 Cabinet speech that private hoarding "brings no benefit to either my people themselves or to my state." However, gold sellers in Istanbul’s Grand Bazaar report that public mistrust of the banking system remains high. This sentiment is attributed in part to recent economic instability, during which Erdogan has dismissed six central bank heads over the last seven years.
For the average Turkish citizen, the concrete change would involve moving physical assets—like the gold coins and jewelry traditionally kept in home safes or boxes—into digital or physical bank accounts. Economists like Selva Demiralp, a former Turkish central bank economist, suggest that such a shift would allow regulators to better manage the economy and restore consumer confidence. She stated that moving these assets could eventually lead to more investment, more jobs, and lower unemployment rates across the country.
Additionally, the reliance on physical gold has specific knock-on effects for Turkey's national balance sheet. Demiralp noted that because a large portion of gold must be imported annually to meet demand, these private purchases contribute to the country’s current account deficit. While the government continues to seek ways to integrate this gold into the economy, no specific deadlines or new legislative mandates were reported. For now, many citizens, including those receiving gold as wedding gifts this September, indicate they intend to keep their holdings at home.