Because Turkey should adopt the euro

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Turkey could adopt the euro, which would allow it to resolve the balance of payments crisis, soaring inflation and the fall of the pound, writes Asli Karahan-Ay, head of investments at Lioness Capital.

This decision will also be in the interest of the European Union for the stabilization of the country and the re-attachment of the country to the chariot of the West, Karahan-Ay said in an article in Politico.

There is already a monetary agreement between the EU and Andorra and San Marino, and Turkey would have the right to adopt the euro without the free movement of Turks in Europe, participation in the European Parliament or any other European body, he said.

“In this scenario, the EU would not take on Turkey’s debt and Ankara would not take a seat on the Governing Council of the ECB until it meets all five criteria of the Maastricht Treaty on inflation, budget deficits, government debt to GDP, exchange rates and long-term interest rate stability “.

“Why would such an arrangement be attractive to Turkey? Surely, it would lose its flexibility to devalue its currency to boost competitiveness the next time it faces financial difficulties,” Kayahan-Ay said. “But the adoption of the euro would also solve many problems for the Turkish economy, eliminating the chronic problem of inflation and making the country an attractive investment destination with low interest rates, high growth and no exchange rate risk.”

“It would also be a relatively easy transition. About 55% of Turkish bank deposits are already in foreign currencies – mainly euros and dollars. Turkey-EU trade is already large and growing after two decades in the customs union. In 2020 “Trade with the EU accounted for 41% of Turkish exports and 33% of its imports. The adoption of the euro would also accelerate the alignment of the Turkish financial sector with European banking and financial laws and regulations, increasing the industry ‘s credibility.” .

The adoption of the euro by Turkey will help restore the damaged bilateral relationship, bring the country firmly on the western trajectory and could be completed in less than a year, he said.

“It is often said that we should never let a crisis go to waste. Turkey’s monetary woes give Brussels and Ankara the opportunity to restore broken relations, deepen trade and strengthen economic ties while avoiding the political minefield. “which is Turkey’s accession to the EU,” Kayahan-Ay said.

“The EU should welcome Turkey into its monetary union and Turkey should be willing to join. Ataturk would no doubt have endorsed it. And with his smart, piercing eyes and enigmatic smile, he would look good on his coin. “, she wrote in her article.

Petros Kranias

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Source From: Capital

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