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History of Paper Money

History of Paper Money
 

Long before the invention of money, early humans developed barter trading in which various goods from cowrie shells to precious metals were exchanged for other goods. According to historical records, leather money was used in China in 118 BC. The first paper banknotes appeared in China in 806 AD.

In the West, it was at the end of the 17th century that paper banknotes were first printed and used. It is known that the first paper money was issued and put into circulation by the Government of Massachusetts in the United States of America, and by Goldsmiths in England in the 1690s. After the establishment of the Bank of England in 1694 and later on other central banks, paper banknotes became widespread throughout the world.

A. BANKNOTES IN THE OTTOMAN EMPIRE

1) Kaime

In the Ottoman Empire, the first banknotes were put into circulation in the Tanzimat Era at a time when many administrative, social and legal reforms were on the agenda. Banknotes were issued mainly to finance the reforms during that period.

The first Ottoman banknotes were issued during the reign of Abdulmecit in 1840 under the name of "Kaime-i Nakdiye-i Mutebere- Paper Money", which were, in a sense, debt certificates or treasury bonds bearing interest. These banknotes were not produced in a printing plant, but were handmade and stamped with the official seal. Since these banknotes could easily be forged and people's confidence in paper money was low, Kaime banknotes were replaced with printed notes  from 1842. Kaime banknotes were printed in various forms and amounts in the Ottoman Empire until 1862.

Bank-ı Osmani – the Ottoman Bank, which had been established in 1856 with English capital by a Royal Edict of the King of England, became a state bank as an English-French partnership under the name of Bank-ı Osmanii Şahane Imperial Ottoman Bank in 1863. During the times when the Ottoman State frequently had to  borrow money from the European markets, England and France trusted the Ottoman Bank, which was under their management, rather than the Ottoman State and preferred to conduct their financial relations through this bank.

The Ottoman State granted the privilege of issuing banknotes to the Ottoman Bank for a 30 year-period. It was agreed that within this period the government would not issue any banknotes  and would not allow any other institution to assume this function. For the first time in 1863, the Bank issued banknotes that were convertible to gold on demand and stamped with its own official seal  as well as the seal of the Ministry of Finance. The bank issued banknotes in various forms and amounts between 1863 and 1914.

Despite the guarantee given to the Ottoman Bank, the Ottoman government issued banknotes in agreement with the Ottoman Bank during the 1876-1877 Ottoman - Russia War -known as the 93 War- to finance war expenditures.

2) Evrak-ı Nakdiye (Cash Documents)

During the First World War, the Imperial Ottoman Bank rejected the government’s demands of a loan and a new banknote issue. The conflict was resolved when the Bank announced that it had given up its privilege of issuing banknotes during the war period. Hence, the Ottoman government issued more than 160 million lira worth of banknotes against gold and German Treasury Bills in seven series in the four-year period  starting from 1915. These banknotes were adopted by the Republic of Turkey under the name of "Evrak-ı Nakdiye - Cash Documents".

B) THE REPUBLICAN PERIOD BANKNOTES

Evrak-ı Nakdiye that were inherited from the Ottoman Empire remained in circulation until the end of 1927, as the Republic was still not in a position to issue its own banknotes in its early years .

Since banknotes are  symbols of independence and sovereignty of a state, the Grand National Assembly of Turkey decided to issue the first Turkish banknotes and approved  Law No. 701 called "Exchange of Present Cash Documents with the New Ones" dated 30 December 1925. With this law,  it was envisaged that a committee would be established by the representatives of Ziraat, Osmanlı, İtibar-i Milli, İş, Akhisar, Tütüncüler, Akşehir and some other banks operating in Turkey, and that the design of banknotes and the changeover from the old notes to the new ones would be determined with the guidance of the Ministry of Finance. The Committee decided to replace Evrak-ı Nakdiye (cash documents) with new banknotes of  the same amount and quality.

1) First Issue (E1) Banknotes

The Committee chaired by Abdulhalik Renda, the Minister of Finance, decided to issue First Emission Group banknotes in the denominations 1, 5, 10, 50, 100, 500 and 1,000 Turkish Lira at the end of a nine month-study. The production of new banknotes was commissioned to an English printing firm, Thomas De La Rue, and these banknotes were printed by intaglio technique on papers with watermarks.

As banknotes of this emission group were printed before the Alphabet Revolution on 1 November 1928, their main text was in Arabic letters, whereas the denominations were in French.

Being as the first banknotes of the Turkish Republic, First Emission Group banknotes (E1) were put into circulation on 5 December 1927. Also, Evrak-ı Nakdiye were withdrawn from circulation on 4 December 1927, and lost their value as legal tender on 4 September 1928.

Foundation of the CBRT

In line with the decision of the Republican government to grant the privilege of issuing banknotes to a national bank, the Grand National Assembly of Turkey approved the establishment of the CBRT by Law No. 1715 dated 11 June 1930. After the completion of the necessary preparations, the Bank started its operations on 3 October 1931 and the privilege of issuing banknotes was granted exclusively to the CBRT.

2) Second Issue (E2) Banknotes

Following the establishment of the CBRT, the banknotes printed before the Alphabet Revolution were replaced with the new ones printed in the Latin alphabet.

The new banknotes, prepared in the Latin alphabet ranged in 9 different values and 11 series, consisting of denominations 50 Kuruş, 1, 21/2, 5, 10, 50, 100, 500 and 1,000 Turkish Lira. The 50 Kuruş denomination was printed in Germany, and the others were produced in England.

The Second Emission Group (E2), which contains the first issue of the CBRT’s 5 Turkish Lira denomination, was  put into circulation between 1937 and 1944.

This emission group has both Atatürk and İsmet İnönü (the second President of the Republic) portrayed on the banknotes.

Banknotes that could not be put into circulation during the Second World War

50 Kuruş and 100 Turkish Lira denominations, printed in England and bearing the portrait of İnönü, were damaged on their way to Turkey in a ship attack in the Port of Piraeus. Also, the denomination of 50 Turkish Lira could not be put into circulation because of an air raid that damaged the printing plant in London.

3) Third Issue (E3) Banknotes

Third Emission Group banknotes, all of which bore  the portrait of İsmet İnönü, were put into circulation between 1942 and 1947 in 7 series and 6 different values, consisting of the denominations 21/2, 10, 50, 100, 500 and 1,000 Turkish Lira. This group of banknotes was printed in England, Germany and the United States of America.

4) Fourth Issue (E4) Banknotes

The Fourth Emission Group banknotes, which had the least number of denominations and series in the ninth emission groups, were printed in the United States of America in 2 different values  - 10 and 100 Turkish Lira- in 3 series. These banknotes, all of which bore the portrait of İnönü, were put into circulation in 1947 and 1948.

5) Fifth Issue (E5) Banknotes

The Fifth Emission Group banknotes were printed in 32 series and 7 different values consisting of the denominations 21/2, 5, 10, 50, 100, 500 and 1,000 Turkish Lira. They were put into circulation between 1951 and 1971.

Attempts to establish a banknote printing plant in our country were initiated at the end of 1930s but postponed due to the Second World War. In 1951, studies started again, and the Banknote Printing Plant was established and started producing banknotes in 1958.

Some of the Fifth Emission Group banknotes were printed in England and some were produced in our Banknote Printing Plant. The 1,000 Turkish Lira denomination, named by the people as the "Purple Thousand", was also in this emission group.

The banknotes used to be printed in the United States of America, England and Germany before the establishment of the Banknote Printing Plant in 1958. The denomination of 100 Turkish Lira in the third series of the Fifth Emission Group (E5) was the first banknote printed in Turkey.

6) Sixth Issue (E6) Banknotes

The Sixth Emission Group banknotes were issued in 7 different values and 18 series, consisting of the denominations 5, 10, 20, 50, 100, 500 and 1,000 Turkish Lira. They were put into circulation between the years 1966 - 1983. Of these banknotes, the first series of 20 Turkish Lira was printed in England and the others were printed in Turkey.

7)  Seventh Issue (E7) Banknotes

The Seventh Emission Group banknotes, which were first put into circulation  in 1979, were issued in 36 series and 15 different values, consisting of the denominations 10, 100, 500, 1,000, 5,000, 10,000, 20,000, 50,000, 100,000, 250,000, 500,000, 1,000,000, 5,000,000, 10,000,000 and 20,000,000 Turkish Lira as of 2002. All of these banknotes were printed in Turkey.

E7 Emission Group banknotes were withdrawn on 1 January 2006 and will lose their value at the end of the 10-year redemption period.

8) Eighth Issue (E8) Banknotes

According to the Law on the Currency Unit of the Republic of Turkey (Law No: 5083, dated 28.01.2004) and in the framework of the six zero-dropping operation which was realized for the first time in our country, the eighth emission group was put into circulation on 1 January 2005, in six different values consisting of the denominations 1,5,10,20,50 and 100 New Turkish Lira. All of these banknotes were printed in Turkey.

The Eighth Emission Group banknotes were withdrawn on 1 January 2010 and will lose their value at the end of the 10-year redemption period.

9) Ninth Issue (E9) Banknotes

According to Article 1 of the Law on the Currency Unit of the Republic of Turkey, numbered 5083, the Council of Ministers was authorized to remove the prefix "New" from the "New Turkish Lira" and from the "New Kurus". The council determined that this change would take effect on January 1, 2009, as published in the Official Gazette on May 5, 2007. 

The Ninth Emission Group Turkish Lira banknotes with their renewed designs, systematic size variation and advanced security features have been put into circulation on January 1, 2009, in six different values consisting of denominations 5, 10, 20, 50, 100 and 200 Turkish Lira. The Ninth Emission Group second series 10, 20 and 100 Turkish Lira banknotes were issued on December 24, 2012. The Ninth Emission Group second series 5, 50 and 200 Turkish Lira banknotes were issued on April 8, 2013. Other than the change in dominant color of second series 5 Turkish Lira and change in signatures of 5, 10, 20, 50, 100 and 200 Turkish Lira banknotes, E-9 Emission group second series banknotes are identical to the first series banknotes. E9 Emission Group is composed of two series and six denominations. The Ninth Emission Group second series banknotes are concurrently in circulation with the first series.

Since the foundation of the Republic, banknotes have been put into circulation in 132 series and in 9 issue groups. All of the banknotes in the first six emission groups and some of the banknotes in the seventh group were withdrawn from circulation at various dates and lost their values at the end of their 10-year redemption periods.

General Directorate of Banknote Printing Plant, which has been producing our banknotes since 1958, is capable of making original composition and plates in contemporary standards that requires a long experience. All of the design, plate making and printing works of denominations of 5, 10, 20, 50, 100 ve 200 Turkish Lira from E9 Emission Group are successfully carried out by its own experienced staff and equipment.

BIBLIOGRAPHY:

  • Akyıldız, A. (1996): Osmanlı Finans Sisteminde Dönüm Noktası, Kağıt Para ve Sosyo-Ekonomik Etkileri - Eren Yayıncılık
  • Köklü, A. (1947): Türkiye'de Para Meseleleri - Milli Eğitim Basımevi
  • Tekeli, İ. - İlkin, S. (1997): Para ve Kredi Sisteminin Oluşumunda Bir Aşama Türkiye Cumhuriyet Merkez Bankası - Department of Banknote Printing Plant.

 
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