FROM the outside, it looks like any other automatic bank machine on the streets of Istanbul. But rather than notes, this one distributes small pieces of gold.

    Gold is hugely prized in Turkey not just for ornamentation or investment by banks but as a secure way for private individuals to hold their savings.

    Many people in Turkey — which has one of the lowest private savings rates among major economies — keep gold as security for a “rainy day” rather than products offered by banks.

    According to estimates, Turks hold some 3,500 tons of gold. Banks have sought to capitalize on the tradition by offering accounts denominated in gold.

    “We were thinking about putting all that gold back into the financial system somehow, so we decided to create gold accounts for our clients,” said Seda Yilmaz, marketing manager of the Kuveyt Turk Bank, the first to do so, in 2007.

    “So we bought one kilo of gold, and the demand on the first day was three kilos. It was a very good decision, so we decided to move ahead.”

    Eight years on, Kuveyt Turk manages 200,000 gold accounts with different products allowing sales by cheque, bank transfer or mobile phone.

    Now with the introduction of the first ATMs that issue gold as well as the usual banknotes, consumers can withdraw pieces of gold weighing 1 or 1.5 grams.

    The success of the ATMs started a trend, with many other Turkish banks latching on. The volume of gold in their reserves has gone from 2 tons in 2007 to 250 tons.

    The government has also tried to join the bandwagon with the central bank allowing commercial businesses to hold some of their reserves in gold and opening this up to private investors.

    “Thanks to this measure, our sales jumped 85 percent last year,” said Aysen Esen, head of a leading gold refinery in the country.

    “Over the last two years, banks have taken in some 40 tons of gold that people had stashed under their beds. And it’s just a small proportion of the reserves.”(SD-Agencies)