Turkey — The Lira, Hyperinflation, and the Flight into Crypto: A Diagnosis of the Old Model | SforNews

20 Aug, 2026
| Salome K

TURKEY — THE LIRA, HYPERINFLATION, AND THE FLIGHT INTO CRYPTO

A Diagnosis of the Old Model and Its Place in the New Energy-Digital System

DISCLAIMER

This material represents an analytical study prepared by the editorial board of the journals “Kafedra” and SforNews as part of a series of works on the transformation of the global energy and financial architecture. The material is based on open data, official documents, public statements, and analytical materials from independent experts.

This material is not legal advice, investment recommendation, or a call to action. The authors do not provide advice on the purchase, sale, or storage of any assets, including cryptocurrencies. All conclusions are probabilistic and analytical in nature. The editorial board is not responsible for any financial or legal decisions made based on the content read.

ABOUT THE SERIES

This material continues a series of articles devoted to analysing the readiness of various countries and regions for the transition to a new energy-digital system. The series serves as an evidence base for the Memorandum “Architecture of the New Energy-Digital System” and is intended to clearly demonstrate:

1. That old models of energy and financial management do not work in any country in the world.

2. That the new system inevitably revolves around energy as a core asset.

3. That bitcoin is becoming the only tool for monetising energy when physical export channels are closed.

Each article in the series presents an architectural diagnosis of a specific country or region in terms of its readiness for the global transition.

Previous articles in the series: “UAE — Architect of the New System”, “Iran — Bitcoin as a Weapon of Survival”, “Russia — an Energy Sovereign Without a Strategy”, “Japan — the ZeroRate Trap”.

INTRODUCTION: A BRIEF DIAGNOSIS

Turkey is the most unpredictable economy among G20 countries. This is a country that simultaneously is:

• An energy debtor — more than 90% of its energy resources are imported, and its energy import bill in May 2026 jumped by 43.4% yearonyear to $6.1 billion [1].

• A victim of geopolitics — the Middle East conflict hits Turkey through rising energy prices, undermining efforts to bring down inflation [6].

• A pioneer of strict crypto regulation — Turkey has completely banned crypto ATMs, imposed strict limits on stablecoin transfers, and is creating one of the toughest regulatory environments for digital assets in the world [4].

• A builder of its own nuclear power industry — the Akkuyu NPP (Rosatom) is scheduled to be launched in 2026, creating a new industry in Turkish energy [2].

Turkey’s paradox: a country with a population of almost 88 million, rapid economic growth, and one of the highest interest rates in the world (37%) [3] is losing confidence in its own currency. The lira depreciates by an average of 25% per year [7][8]. Inflation remains at 30–35% [7]. Citizens are fleeing the lira into dollars, gold, and cryptocurrencies.

Turkey is not building a new system. It is trying to survive in the old one, tightening control over what it cannot control, and seeking salvation in alliances with those who have energy.

SECTION 1. THE OLD MODEL: WHAT EXISTED, WHAT BROKE

The Turkish economic model of the last two decades was built on three pillars:

1. Cheap labour and exports — textiles, automobiles, electronics for Europe and the Middle East.

2. Construction boom — infrastructure, real estate, megaprojects as growth drivers.

3. Cheap credit — interest rates below inflation to stimulate consumption (especially before 2023).

This model no longer works.

Inflation spiralled out of control. In 2022, inflation reached 72.3%. By 2026, Fitch forecasts it to decline to 29.5% by yearend [7]. The Central Bank of Turkey revised its target from 16% to 24% in May 2026 due to the Middle East conflict [6].

The lira collapsed. Average annual exchange rates: 2022 — 16.6 TRY/USD, 2025 — 39.5, 2026 (forecast) — about 49–51 TRY/USD [7][8]. According to Fitch, the rate will end 2026 at 49.5–51 TRY/USD [7]. This is a depreciation of 25% per year [7] — anyone holding savings in lira lost a quarter of their capital annually.

Debt is rising. Government debt, which in 2023 was only 28.2% of GDP, will rise to 25.5% by 2026 [9], and the budget deficit will reach 3.4% of GDP [8].

Dependence on energy imports. Turkey imports more than 40% of its gas from Russia. Its energy import bill in May 2026 jumped by 43.4% to $6.1 billion [1]. Any spike in oil or gas prices hits the balance of payments.

The map (economic growth, export orientation, cheap labour) has ceased to reflect the territory (inflation of 30%, depreciating lira, energy dependence, geopolitical risks).

SECTION 2. ENERGY PROFILE: WHAT EXISTS, WHAT IS MISSING

Turkey is one of the world’s largest energy importers.

What exists	What is missing
Strategic transit corridor (TurkStream, Blue Stream)	Own hydrocarbon surplus — more than 90% imported
Akkuyu NPP (being built by Rosatom, launch in 2026) [2][10]	Energy sovereignty — dependence on supplies from Russia, Iran, Azerbaijan
Developed LNG terminal infrastructure	Sufficient capacity to cover growing demand
Renewable potential (solar, wind, hydro)	Stable baseload without imported gas

Key fact: Turkey depends on Russia as its largest supplier of natural gas, oil, and petroleum products. In 2025, longterm contracts with Botas for the supply of 16 billion cubic metres of gas per year via Blue Stream and 5.75 billion cubic metres via TurkStream expired. New agreements have not yet been signed, creating uncertainty for Turkish energy.

Akkuyu NPP — hope or illusion?

Turkey’s first nuclear power plant is being built by the Russian state corporation Rosatom. The project includes four power units with VVER generation III+ reactors, each with a capacity of 1,200 MW [2][10]. Physical startup of the first unit is scheduled for autumnwinter 2026 [2]. In 2026, Turkey’s Energy Minister Alparslan Bayraktar discussed the construction progress and cooperation prospects in Moscow. Russian Deputy Prime Minister Alexander Novak stated that the NPP “is effectively creating a new nuclear energy industry in Turkey” [2].

However, even after all four units are launched (total capacity 4,800 MW) [10], the NPP will cover only 10% of Turkey’s energy consumption. The country will remain dependent on imported gas and oil. Dependence on Russia in energy will persist for decades.

Geopolitical risk: The Strait of Hormuz is a vulnerability for Turkey. Any escalation in the Middle East hits energy prices and, consequently, the Turkish economy. In May 2026, the Central Bank of Turkey revised its inflation forecast from 16% to 24% precisely because of the Middle East conflict [6].

Conclusion: Turkey cannot physically provide itself with energy. Every jump in energy prices is a blow to the economy. Every geopolitical crisis is a threat to the balance of payments. And thisdependence will remain at least until 2030.

SECTION 3. POSITION ON MINING AND CRYPTOCURRENCIES

Here lies Turkey’s main paradox. The country where citizens actively use cryptocurrencies to protect their savings from inflation is creating one of the strictest regulatory frameworks in the world.

Actual situation: cryptocurrencies are popular in Turkey. Citizens are fleeing the depreciating lira into dollars, gold, and crypto. However, the authorities consider cryptoassets a centre of new risks.

Regulatory environment:

• Law No. 7518 (June 2024) — the basic regulatory framework. Holding, trading, and investing in cryptocurrencies are fully legal. Using cryptocurrencies to pay for goods and services is prohibited.

• Mining — not prohibited individually, but commercial mining requires compliance with licensing and tax requirements. Mining income is subject to personal incometax.

• Complete ban on crypto ATMs. In May 2026, Minister of Treasury and Finance Mehmet Şimşek announced a total and comprehensive ban on all crypto ATMs in the country [4]. The reason — high risks and the use of stablecoins for terrorist financing [4].

• Limits on stablecoins. Turkey introduced a daily limit of $3,000** and a **monthly limit of $50,000 on stablecoin transfers [4]. These measures exceedFATF recommendations [4].

• Taxation: cryptoassets are subject to capital gains tax. Mining and staking are considered incomegenerating activities.

Turkey’s paradox: it imposes some of the strictest restrictions on cryptocurrencies in the world — at the same time as cryptocurrencies are a lifeline for millions of citizens losing savings due to inflation and lira devaluation.

SECTION 4. POSITION OF THE CENTRAL BANK OF TURKEY (TCMB)

The Central Bank of Turkey is the most contradictory central bank among emerging economies. It simultaneously:

• Holds the interest rate at a record high of 37% (June 2026) [3].

• Cannot contain inflation (target 5% in the medium term, reality 30%).

• Is developing the digital lira — but cautiously.

• Is subject to political pressure (Erdoğan demanded low rates for decades, although the situation has now changed).

Instruments:

• Policy rate (oneweek repo) — 37% since January 2026. In June 2026, the Central Bank kept the rate at 37% for the third meeting in a row [3]. The overnight lending rate is 40%, the overnight borrowing rate is 35.5% [3].

• Inflation forecast for 2026 — revised from 16% to 24% in May 2026. The Bank maintains a 5% target in the medium term.

• Tight monetary policy stance will be maintained until price stability is achieved.

Why doesn’t the 37% rate work?

Inflation is caused not by an excess of money, but by structural problems: energy imports, lira weakness, geopolitical risks. Raising rates does not solve these problems — it only kills investment and economic growth.

In the first quarter of 2026, GDP grew by 2.5%. The growth forecast for 2026 is 2.8–2.9% [6][7][8], revised down from 3.4% due to the Middle East conflict [6]. The economy is slowing, but inflation remains high. This is classic stagflation, which the Central Bank cannot control.

New element: digital lira (CBDC).

Turkey is actively developing the digital lira. In August 2026, the Central Bank completed the third stage of selecting projects for the digital lira ecosystem [5]:

• 85 applications received from banks, payment and electronic money institutions [5].

• 23 projects from 12 banks and 6 payment institutions were admitted to the third stage (development and testing in a sandbox) [5].

• Project distribution: 15 — tokenisation, 17 — programmable payments, 7 — selfsovereign identity, 15 — interoperability, 1 — machine payments [5].

Turkey is also cooperating with the UAE on CBDC, exploring crossborder payment possibilities [5].

The paradox of the Central Bank of Turkey: it is creating a digital lira as a control instrument, but cannot stop citizens from fleeing into private cryptocurrencies and dollars. It holds the rate at 37%, but inflation remains at 30%. It bans crypto ATMs, but millions of Turks use crypto exchanges to preserve savings.

SECTION 5. ARCHITECTURAL CONCLUSION: WHAT PATH IS AVAILABLE TO TURKEY

Turkey is the only country that simultaneously:

1. Has high economic growth (2.8–2.9% GDP) [6][7].

2. Suffers from 30% inflation [7] and lira depreciation of 25% per year [7][8].

3. Imports more than 90% of its energy and pays more and more for it [1].

4. Introduces some of the strictest crypto restrictions in the world [4].

5. Builds a digital lira (CBDC) and cooperates with the UAE [5].

6. Launches the Akkuyu NPP to reduce energy dependence, but remains dependent on Russia [2][10].

Unlike Europe, Turkey has not shut down nuclear power — it is building it. But unlike China, it has no strategy covering all three contours of the new system (energy, digital, reserves). It has tactical solutions that contradict each other.

Unlike Iran, Turkey does not use bitcoin as a sanctionsevasion tool — it bans and restricts it. But citizens use it despite the bans.

Unlike Russia, Turkey does not have cheap energy and cannot mine. It imports both energy andcryptocurrencies.

Turkey’s weaknesses:

1. Energy dependence. More than 90% of energy is imported. Any spike in energy prices hits the economy. The energy import bill has already risen by 43.4% [1].

2. Inflation and devaluation. Inflation at 30%, lira depreciating at 25% per year [7][8]. Citizens flee the lira into dollars, gold, and cryptocurrencies. Bans do not stop this process — they only push it into the shadows.

3. Political instability. Economic policy changes after every crisis. From Erdoğan’s “cheap money” to the tight monetary policy of 2024–2026. No longterm strategy.

4. Geopolitical risks. The Middle East conflict hits Turkey through energy prices [6]. The Strait of Hormuz is a noose for the Turkish economy.

5. Lack of a digital strategy. The digital lira is developing slowly. Cryptocurrencies are being banned rather than integrated. Turkey is losing the chance to become a crypto hub, ceding this role to the UAE and Georgia.

Main conclusion:

Turkey will not “import” bitcoin like Europe. It does not have the capital. It will not “mine” bitcoin like Russia or Iran. It does not have cheap energy. It will ban bitcoin — but unsuccessfully, because citizens will continue to use it to protect their savings.

Bitcoin for Turkey is not an “energy coupon” or a “strategic reserve”. It is a failure indicator — a sign that citizens have lost confidence in the national currency and are looking for alternatives outside the system.

While Turkey bans crypto ATMs [4] and imposes limits on stablecoins [4], its citizens continue to flee the lira [7][8]. While the Central Bank holds the rate at 37% [3], inflation remains at 30% [7]. While the country imports 90% of its energy [1], it remains a hostage of geopolitics [6].

The question is not whether Turkey will use bitcoin. The question is whether it can stop the flight from the lira without real economic transformation.

CONCLUSION: HOW TURKEY FITS INTO THE GLOBAL TRANSITION

Turkey is not the architect of the new system nor its beneficiary. Turkey is a battlefield.

Europe will become an eternal importer of bitcoin — because it has no energy.

China is building parallel infrastructure — because it has a strategy.

The US are trying to maintain dominance through a bitcoin reserve — because the dollar no longer works.

Russia could become an energy sovereign — but it has no strategy.

Iran is building a bitcoin economy — because it has no other choice.

Japan is building nothing — it is watching.

Turkey bans — but unsuccessfully. It regulates — but cannot control. It builds a nuclear plant [2][10] — but remains dependent on imports [1]. It develops a digital lira [5] — but citizens prefer cryptocurrencies.

Turkey shows that bans do not work when the old system collapses. Inflation of 30% [7], devaluation of 25% per year [7][8], energy dependence of over 90% [1] — these are not conditions in which you can “ban” alternatives. These are conditions in which alternatives become a necessity.

Global meaning: Turkey is a warning. If you cannot ensure the stability of your national currency, citizens will find another. If you cannot ensure energy sovereignty, you will become a hostage of geopolitics. If you try to ban what you cannot control, you only push it into the shadows.

The question is not whether Turkey will use bitcoin. The question is how long it can ignore the reality in which the old system no longer works.

LIST OF SOURCES

[1] Anadolu Ajansı — Türkiye’s energy import bill jumps 43.4% in May (30 June 2026) — https://www.aa.com.tr

[2] TASS — First unit of Turkey’s Akkuyu NPP to launch in autumn-winter — Rosatom CEO (5 June 2026) — https://tass.com

[3] Anadolu Ajansı — Turkish Central Bank keeps policy rate unchanged at 37% for 3rd straight meeting (11 June 2026) — https://www.aa.com.tr

[4] Anadolu Ajansı — Financial innovation creates new channels for criminals, Turkish minister says (20 May 2026) — https://mobil.aa.com.tr

[5] TCMB (Central Bank of the Republic of Turkey) — Press Release on the Application Results of the Call to Join the Digital Turkish Lira Project Ecosystem (2026-33) (3 August 2026) — https://www.tcmb.gov.tr

[6] IMF (International Monetary Fund) — World Economic Outlook Update, July 2026 (8 July 2026) — https://www.imf.org

[7] Fitch Ratings — Turkey Macroeconomic Forecasts (July 2026) — https://www.fitchratings.com

[8] BBVA Research — Türkiye Economic Outlook. June 2026 (16 June 2026) — https://www.bbvaresearch.com

[9] CaixaBank Research — Türkiye Country Outlook (22 June 2026) — https://www.caixabankresearch.com

[10] Rosatom — Rosatom Presented Nuclear Solutions for Türkiye’s Energy Future at NPPES 2026 (2 July 2026) — https://rosatom-mena.com

NEXT ARTICLE IN THE SERIES: “Oman — a New Player on the Board or a Pawn in Trump’s Hands?”

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