May 24 2019

Best solution to end economic crisis in Turkey is to fix lira to dollar or euro - WSJ

The most logical way for Turkey to escape its current economic crisis is to fix the Turkish lira to the dollar or euro, The Wall Street Journal said.

"The best solution is to implement a currency board that fixes the lira to the dollar or euro. After freezing the monetary base, the lira would float for a period before a fixed rate is set," WSJ said.

This could be the best option for Ankara to recover from the slumping economy since Turkey's President Recep Tayyip Erdoğan has long boasted of ending the country's dependency on the IMF and openly said he didn't want to work with the organisation again.

However, the decision is still hard for a leader like Erdoğan, who tightened his grip on all governmental institutions after winning last year’s presidential election, since it would mean handing over control of monetary policy to Washington or Frankfurt, according to WSJ.

"Yet Mr. Erdogan shows no signs of understanding his own role in the lira mess, so investors and financial ministries around the world should prepare in case of a lira crash," the U.S.-based daily said.