Erdogan Can Save the Turkish Lira
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Turkish Lira Plunges Further on Monday.
He should form a currency board—a monetary-reform measure that’s been tried 70 times and never failed.
Erdogan needs to give up a discretionary monetary policy.
As fantastic as it may sound, particularly for Turks, there is a way to save the lira from its death spiral and crush inflation immediately. Turkey should adopt a currency board. A currency board issues notes and coins convertible on demand into a foreign anchor currency at a fixed rate of exchange. It is required to hold anchor-currency reserves equal to 100% of its monetary liabilities, and it generates profits from the difference between the interest it earns on its reserve assets and the expense of maintaining its liabilities.
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