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 KuruşArticle
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.1
In calculation
and payment of legal and administrative penalties to be applied according to
related Laws, the values lower than one New Turkish Lira (1 NTL) shall not be
taken into account.2
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related conditions for the banknotes currently in circulation, or withdrawn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Provisions repealed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.