LAW ON THE CURRENCY UNIT OF
THE REPUBLIC OF TURKEY
LAW NO: 5083
ENACTMENT: 31.01.2004
The currency unit of the Republic
of Turkey
Article 1- The currency unit of the
Republic of Turkey is the New Turkish Lira. The hundredth part of the New
Turkish Lira is the New Kuruş. One New Turkish Lira (NTL) is equivalent to a
hundred New Kuruş (NKr).
The Council of Ministers is empowered to remove
the expression of “New” used in the “New Turkish Lira” and the “New Kuruş” and
to establish the principles on its application.
Conversion rate between the Turkish Lira and the New
Turkish Lira and rounding off to the New Kuruş*
Article 2- When the Turkish Lira values are converted into the
New Turkish Lira; one million Turkish Lira (1.000.000 TL) shall be equivalent
to one New Turkish Lira (1 NTL).
On the transaction results and at the payment
stages of conversion transactions of the Turkish Lira values to the New Turkish
Lira and the transactions to be conducted in terms of the New Turkish Lira, a
half New Kuruş and the values higher than a half New Kuruş shall be rounded off
to one New Kuruş. The values lower than a half New Kuruş shall not be taken
into account.
Amendment in references to Turkish
Lira
Article 3- All references made to
Turkish Lira or Lira in laws, other legislation, administrative transactions,
court decisions, legal transactions, negotiable instruments and other documents
that produce legal effects as well as payment and exchange instruments shall be
considered to have been made to New Turkish Lira at the conversion rate
specified in Article 2.
Reproducing and publishing of
pictures and images of banknotes
Article 4- Reproducing and publishing
conditions related to dimension, colour, material, resolution, expression to be
written on the banknotes and other related conditions for the banknotes
currently in circulation, or withdrawn from circulation, or to be put into
circulation shall be set by the Central Bank of the Republic of Turkey and
announced in the Official Journal.
Persons who fail to comply with the conditions
to be announced shall be charged with a heavy fine starting from one billion
five hundred million Turkish Lira up to five billion Turkish Lira, unless it
related to a more serious crime.
Provisions repealed
Article 5- The Law No. 3290 on the
Mandatory Use of Lira in the Central Government Accounts dated 24 December 1937
has been repealed.
Provisional Article 1- The Turkish Lira banknotes
and coins that are currently in circulation shall be circulated along with the
New Turkish Lira banknotes as well as the new coins to be issued between 1
January 2005 and 31 December 2005.
The regulations on the concurrent circulation
and conversion of these banknotes shall be determined by the Central Bank of
the Republic of Turkey, while the regulations on the concurrent circulation and
conversion of coins shall be established by the Prime Ministry, the
Undersecretariat of Treasury.
The Minister responsible for the
Undersecretariat of Treasury shall be entitled to remove the doubts with
respect to the execution of the Law hereby and make necessary regulations; the
Ministry of Finance, the Ministry of Industry and Trade, the Undersecretariat
of Treasury, the Central Bank of the Republic of Turkey, the Capital Market
Board, the Banking Regulation and Supervision Agency shall be entitled to make
regulations in the matters that fall within the scope of their duties.
Provisional Article 2- If any and all kinds of legal
transactions and documents issued in terms of Turkish Lira producing legal
effects are converted into the New Turkish Lira before 31 December 2005
(including that date) by taking the conversion rate into account as stipulated
in Article 2 of the Law hereby, transactions and the documents shall be exempt
from any and all kinds of tax, duty, fee and other liabilities.
Provisional Article 3- Between 01 January 2005 and 31
December 2005, the prices of all goods and services shall be expressed in terms
of both the Turkish Lira and the New Turkish Lira on the lists of labels and
tariffs to be arranged within the framework of Article 12 of the Law on the
Protection of Consumers, No. 4077.
Those who do not fulfill this requirement shall
be subject to the penalty stipulated in the second paragraph of Article 25 of
the Law, No. 4077.
Enforcement
Article 6-
a)
Article
4, the second and third paragraphs of provisional Article 1 of this Law shall
enter into force on their enactment dates,
b)
The
other Articles shall enter into force on 1 January 2005.
Execution
Article 7- The provisions of this law shall
be executed by the Council of Ministers.
GENERAL STATEMENT
OF REASONS
The inflationary process experienced in Turkish
economy in the 1980-2002 period was also reflected in the amount of banknotes
in circulation. While the amount of banknotes in circulation (volume of
currency issued) stood at TL 278.6 billion on 31 December 1980, it reached TL 7
quadrillion 635 trillion 621,9 billion, increasing by 27,407 times as of 31
December 2002.
As a result of this development, while the need for
banknotes in circulation had simply been met by banknotes with denominations
varying from 50 Kuruş to 1,000 Turkish Lira in the period between 1927 and
1980, new banknotes with larger denominations have made their way into
circulation since 1981, driving away those in smaller denominations from
circulation, in order to cope with the increasing need for banknotes in
circulation. Thus, the composition of Turkish Lira banknotes in circulation
consisted of denominations of 250.000, 500.000, 1.000.000, 5.000.000,
10.000.000 and 20.000.000 at the end of 2002.
Consequently, Turkish Lira has ended up in large
denominations unprecedented in the world, creating several problems for
expressing and writing the figures.
For this reason, removing six zeros from banknotes,
adopting a new unit of currency based on a conversion rate, with which one
million Turkish Lira equals one New Turkish Lira
(1,000,000 TL = 1 NTL), and thus bringing a general
simplification in expressing and writing the monetary values and records within
the scope of the national economy is considered useful for practical reasons.
The Law has been prepared for this purpose.
THE RATIONALE OF ARTICLES
Article 1- The Article provides that the
currency unit of the Republic of Turkey shall be the New Turkish Lira (NTL).
The centesimal subdivision of the New Turkish Lira (NTL) is the New Kuruş
(NKr), and one New Turkish Lira corresponds to a hundred New Kuruş.
Therefore, it is obvious that the New Turkish
Lira should replace the Turkish Lira as a unit of account in keeping the books
and records.
A look at the worldwide applications reveals that
the countries, which have scrapped zeros from their currency unit, have
generally renamed their currency unit by placing the expression of “new” before
their former currency. Afterwards they have removed this expression returning
to their former currency name. The same is true also in Turkey. The New Turkish
Lira shall be the new currency unit by scrapping six zeros from the money still
in circulation. The Council of Ministers has been authorized to remove the
expression of “new” in “New Turkish Lira” and “New Kuruş” with the aim of
returning to the old currency unit and using the Turkish Lira as a unit of
account in books and records again.
Article 2- As provided by this Article,
the Turkish Lira has been re-named as the New Turkish Lira; six zeros have been
removed from the Turkish Lira, and one million Turkish Lira has been equalled
to one New Turkish Lira (1.000.000 TL= 1 NTL).
The prices of goods and services can be less
than one New Kuruş and such values can also be expressed with fractions of one
New Kuruş. By multiplying certain fixed numbers, the values involved in
accrual, collection and payment transactions such as taxes, foreign exchange
buying and selling may result in less than one New Kuruş, or the remainder
thereof can be less than one New Kuruş.
This Article provides that this rounding off
operation should be applied not on the unit prices, but on the transaction
results and at the payment stage. Payments should be recorded with two digits
after comma at the most. The Article also stipulates that due to lack of coins
that will allow payments less than a New Kuruş on the transaction results and
at the payment stages of conversion transactions of the Turkish Lira values to
the New Turkish Lira and the transactions to be conducted in terms of the New
Turkish Lira, a half New Kuruş and the values higher than a half New Kuruş
shall be rounded off to one New Kuruş. The values lower than a half New Kuruş
shall not be taken into account. Hence, some technical difficulties, such as
renewal of numerical data processing electronic devices and computer softwares
have been averted.
Article 3- Relying on the fact that the
New Turkish Lira is accepted as the new currency unit, this Article hereby
provides that any references to Turkish Lira or Lira in laws and other
regulations, in administrative transactions and legal acts, in documents
bearing legal effects, or in a broader sense, in any juridical relationship, in
instruments of payment and exchange should be deemed to be made to the New
Turkish Lira and considered as valid, with a conversion rate of one million
Turkish Lira corresponding to one New Turkish Lira (1.000.000 TL= 1 NTL).
The introduction of the New Turkish
Lira shall not alter the terms and conditions of juridical relations, and shall
not give the right to any of the parties to claim an excuse to alter or cancel
a juridical relation unilaterally, in fulfillment of his/her obligation.
Article 4- As there are no penal clauses
to be applied in our legislation for unintentional reproducing and publishing
of pictures and images of banknotes that might result in counterfeiting, with
this Article it has been aimed to eliminate this legal deficiency and harmonize
with the legislation of European Union.
As these arrangements might be
updated by the European Central Bank, in order to minimize the amendment of
this Law, it is envisaged that reproducing and publishing conditions related to
dimension, colour, material, resolution, expression to be written on the
banknotes and other related conditions for the banknotes currently in
circulation, or withdrawn from circulation, or to be put into circulation shall
be set by the Central Bank of the Republic of Turkey and announced in the
Official Journal. It is also envisaged that persons who fail to comply with the
conditions to be announced shall be subject to punishment.
Article 5- As the Article provides that
the New Turkish Lira shall be the currency unit of the Republic of Turkey, the
Law No. 3290 on the Mandatory Use of Lira in the Central Government Accounts
dated 24 December 1937 has been repealed.
Provisional Article 1- With this Article, in view of
experiences of other countries, it is envisaged that Turkish Lira banknotes and
coins should remain in circulation along with the New Turkish Lira banknotes and
coins for one year at maximum between 1 January 2005 and 31 December 2005 to
allow sufficient time to elapse before the replacement of the old currency unit
with the new one, to avoid adverse effects on the credibility of the new
currency, and to allow smooth monitoring of both currency units.
It is decided that principles related to dual
circulation and replacement of banknotes shall be determined by the Central
Bank of the Republic of Turkey whereas principles related to dual circulation
and replacement of coins shall be determined by the Undersecratariat of the
Treasury.
Moreover, in order to avoid a legal gap in the
transition period of this Law, the Minister responsible for the
Undersecretariat of Treasury shall be entitled to remove the doubts with respect
to the execution of the Law hereby and make necessary regulations; the Ministry
of Finance, the Ministry of Industry and Trade, the Undersecretariat of
Treasury, the Central Bank of the Republic of Turkey, the Capital Market Board,
the Banking Regulation and Supervision Agency shall be authorized to make
regulations in the matters that fall within the scope of their duties.
According to Article 37 of the Law
on the Central Bank of the Republic of Turkey No. 1211, dated 14 January 1970,
the legal circulation period of Turkish lira banknotes to be withdrawn from
circulation shall be ten years beginning from 1 January 2006.
Provisional Article 2- With this Article, it is decided that parties will be exempt from taxes,
fees, charges and other liabilities arising from all kinds of legal acts,
negotiable instruments and documents issued in terms of Turkish Lira producing
legal effects into the New Turkish Lira before 31 December 2005 (including that
date) by taking the conversion rate into account as stipulated in Article 2 of
the Law hereby.
Provisional Article 3- With this article, it is required
that the prices of all goods and services shall be expressed in terms of both
Turkish Lira and New Turkish Lira starting from 01 January 2005, when the New
Turkish Lira will be put into circulation, until 31 December 2005, which is the
deadline of dual circulation of banknotes and coins of Turkish Lira and New
Turkish Lira, on the lists of labels and tariffs to be arranged within the
framework of Article 12 of the Law on the Protection of Consumers, dated 23
February 1995 and No. 4077. It is decided that those who do not fulfill this
requirement should be subject to the penalty stipulated in the second paragraph
of Article 25 of the same Law.
Article 6- With this article, it is envisaged
that Article 4, the second and third paragraphs of provisional Article 1 of
this Law should enter into force on the enactment date, while the other
Articles should enter into force on 1 January 2005, in order to facilitate the
preparatory and regulatory works to be done by the Ministry of Finance, the
Ministry of Industry and Trade, the Undersecretariat of Treasury, the Central
Bank of the Republic of Turkey, the Capital Market Board and the Banking
Regulation and Supervision Agency for transition to the New Turkish Lira, as
well as to avoid any problem in keeping the books and records.
Article 7- This articles refers to the
execution of this Law.
* Amended by Law dated 16/07/2004 and numbered 5228, published in the Official Journal dated 31/07/2004 and numbered 25539.