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Turkey Devises Bonds to Pay If Banks Lose From Erdogan Lira Plan

Residents pass a mural of Turkish President Recep Tayyip Erdogan in Bursa, Turkey on Jan. 4. — Residents pass a mural of Turkish President Recep Tayyip Erdogan in Bursa, Turkey on Jan. 4.
Photographer: Moe Zoyari/Bloomberg

By

Kerim Karakaya, and

January 6, 2022, 12:29 PM UTC

Turkey’s government is seeking approval to issue new bonds to compensate banks for possible losses from lira deposits linked to foreign-exchange rates.

The Ministry of Treasury and Finance will be able to issue specially designed bonds to lenders instead of paying them cash, according to a bill submitted by the ruling AK Party to legislators. The banks will then use the securities to pay lira deposit holders additional interest should the currency depreciate again.