Turkey's $640 Billion Gold Hoard Undermines Economic Policy

Turkey's household gold habit is causing concern for officials who estimate around $640 billion in gold and foreign currency remains outside the formal financial system.

This phenomenon, known as 'yastık altı' or 'under the pillow,' reflects a long-standing preference for keeping physical gold at home as protection against inflation, currency weakness, and financial uncertainty.

Economists say that this practice has significant implications beyond unused savings. Selva Demiralp, an economist at Koç University, notes that physical gold kept outside banks cannot support normal lending.

The government estimates that the country's physical gold stock is around 5,000 metric tons, but such holdings cannot be directly counted.