Turkey's decision to repatriate its gold reserves from the US could have been prompted by fears of possible US sanctions over the Zarrab case and potential confrontation with Washington over Syria, suggests Turkish economist and author Mustafa Sonmez.
"The Central Bank of Turkey held part of its gold reserves in the Federal Reserve System of the United States, the Bank of England and the Bank for International Settlements," Sonmez told Sputnik Turkey. "However, it became known that in 2017 Turkey had withdrawn bout 30 tons of its gold reserves from the US Federal Reserve and redirected them to two different organizations. Not only gold reserves were transferred from America, but also bonds, that means that [Turkey's] accounts [in the US] were nullified."
Zarrab cooperated with US prosecutors and testified against Deputy CEO of Turkey's Halkbank Hakan Atilla and President Recep Tayyip Erdogan, claiming that the latter could have been aware of the deal.
Sonmez believes that Washington could impose sanctions on the Turkish banking system, most notably, Halkbank.
Second, there are serious concerns about the outcome of the ongoing confrontation between Ankara and Washington over Middle Eastern affairs, the economist highlighted.
For his part, Enver Erkan, Turkish economist and GCM securities expert, opined that the situation is unusual for Turkey.
"During the Second World War, when [Nazi Germany leader Adolf] Hitler posed a threat to Europe, many countries transferred their gold reserves to the United States due to their geographical location and for security reasons. As a result, part of Turkey's gold reserves were placed in the Federal Reserve Bank of New York. However, since 2002 Turkey has begun to recollect its gold assets, which were kept in various countries. The same is done by other countries, but it was all caused by Germany," the expert emphasized.
The economist echoed Sonmez, suggesting that Ankara's decision to remove its gold from the US Federal Reserve Bank could have been triggered by security concerns. Being stored outside the country, gold reserves could become subject to debate, he emphasized, adding that recently, "US-Turkish relations have come to the point when they prompt a crisis of confidence."
Erkan explained that a substantial part of gold stocks withdrawn from the US was redirected to the Bank of England and the Bank for International Settlements.
"Of course, in the current situation, one could argue about the extent to which the UK is reliable, but I believe that Turkey has taken a strategic step," the economist noted.
He highlighted that the Bank of England remains one of the most reliable gold depositories in the world. Additionally, the financial institution makes it possible to obtain currency in exchange for bullion. According to Erkan, storing all of Turkey's gold reserves in domestic vaults resembles nothing less than hiding one's money under the mattress.
The Central Bank of the Republic of Turkey (CBRT) has repatriated its gold from the Federal Reserve System of the United States, according to the bank's annual report.
The Milliyet newspaper wrote that the largest Turkish private banks responded to the call of President Erdogan "to get rid of the pressure of the exchange rate and use gold against the US dollar" and withdrew their bullion from abroad. In general, Turkey has repatriated 220 tons of the precious metal, including 28.7 tons which were brought back from the US in 2017.
According to World Gold Council estimates, Turkey's gold reserves amount to 591 tons, making the country the 11th largest holder of the yellow metal.
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The views and opinions expressed in the article do not necessarily reflect those of Sputnik.