Will Turkey become the next BTC nation?
3 min readIn Turkey there is a lot in trouble. According to data from the national statistics office, the country’s inflation is around 36 percent, President Erdogan’s poll numbers are staggering – the approval for the course of the governing party AKP is only 24 percent of the votes and thus for the first time in a long time behind those of the opposition party CHP.
It couldn’t be more different for his youngest guest of state. We are of course talking about Nayib Bukele. The President of the Republic of El Salvador achieves approval ratings that Erdogan himself could only dream of at his peak. In the 2019 presidential election, Bukele achieved 53 percent and won the elections out of the box.
When it comes to currency regimes, the two countries could not be further apart. While Turkey is arguably the epitome of a misguided fiat money system, El Salvador declared the hardest money in human history its national currency in 2021.
Yesterday, Thursday, January 20, Bukele paid a visit to Turkey. According to his presidential office, the primary concern was bilateral cooperation between the two nations. On the one hand, Bukele opened El Salvador’s foreign representation in Ankara. On the other hand, the talks with the Turkish government were about common trade interests, clean energy sources and stronger military cooperation.
Con la inauguración de la Embajada de El Salvador en Ankara, Turquía, fortalecemos el trabajo conjunto en las siguientes áreas:
— Casa Presidencial 🇸🇻 (@PresidenciaSV) January 20, 2022
✅ Educación
✅ Agricultura
✅ Infraestructura logística
✅ Fuentes de energía limpia
✅ Equipamiento militar
✅ Desarrollo aeroespacial
🇹🇷🇸🇻 pic.twitter.com/zc7A0uMiUN
Since President Bukele stands like no other for the state acceptance of a BTC standard, the question quickly arose on social networks such as Twitter as to whether Bukele Erdogan was suggesting the adoption of BTC as legal tender. In view of the galloping inflation, this is a perfectly conceivable scenario.
It is obvious that the talks between the two heads of state were also about BTC. Bukele had nurtured expectations himself by posting corresponding teasers on Twitter.
But what would Turkey gain from a state currency BTC?
Turkey is not El Salvador
There are two main reasons why El Salvador jumped on the BTC bandwagon so willingly: The country has a strong to authoritarian president who was able to enforce the decision de facto single-handedly. On the other hand, the currency regime is a special one. El Salvador has not had its own currency since 2001, but relies on the US dollar as the number one means of payment. While the former clearly shows similarities to the Turkish president’s style of government, the latter is probably the most plausible reason why Turkey will not go down this path for the time being .
The Turkish leadership has repeatedly glorified the lira in patriotic terms. Citizens should exchange their currency and gold holdings for lira, and the state will then compensate for the loss of purchasing power.
Symbolic political banter such as price controls in supermarkets is now on the agenda. The reason for the fall in the currency is not the sticking to the key interest rate, which Erdogan has staunchly opposed to raising, but foreign financial powers and “unfair price increases” in retail. The Turkish government does not like raising the key interest rate because the debt-based refinancing of the national budget then becomes increasingly difficult.
The fact that not a word was said about BTC at the joint press conference between the two heads of state suggests that Erdogan (for the reasons mentioned) has no interest in establishing BTC as the national currency. No wonder: Erdogan recently declared war on cryptocurrencies. There may have been talks about BTC. However, Bukele Erdogan was apparently not able to convince.
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