The Israeli old shekel is the rare case in this archive that was pulled back from the edge rather than carried over it. Israel’s currency in the first half of the 1980s was the shekel (more precisely the old sheqel, issued from 24 February 1980), and it was dying of the classic disease: chronic government deficits financed by a central bank that could not say no. Consumer prices rose about 445% over the course of 1984, and through the first half of 1985 the annualized pace ran higher still — into the hundreds of percent, with some readings near 700% annualized. That is a severe inflation by any measure. It is not, however, a textbook hyperinflation: it never came close to the Cagan threshold of 50% in a single month. The verdict here is Stabilized, and Israel earned it by acting before the disease became terminal.
The driver was textbook deficit monetization. Years of large public-sector deficits — defence spending, subsidies, a bloated state — were covered in part by the Bank of Israel printing money, and the inflation was then locked in by pervasive indexation. Wages, savings, mortgages, and bonds were tied to the consumer price index or to the dollar, so each month’s price rise was mechanically passed into the next. As in Brazil, indexation made daily life survivable and stabilization nearly impossible: the price level had a memory and a momentum largely detached from current policy. The 1983 bank-shares crisis, in which the major banks’ manipulated share prices collapsed and the state was forced to bail out depositors, added a fiscal shock on top of the structural one.
The reckoning came on 1 July 1985, when the national-unity government of Shimon Peres launched the Economic Stabilization Plan, designed by finance minister Yitzhak Moda’i and economist Michael Bruno. It was a coordinated, near-simultaneous strike on every engine of the inflation at once: a sharp devaluation followed by a fixed exchange rate as a nominal anchor, deep cuts to the budget deficit, a negotiated wage freeze with the Histadrut labour federation, temporary price controls, and — crucially — a legal end to the automatic monetary financing of the deficit. Within two months annual inflation fell from roughly 445% to under 20%, with almost no rise in unemployment.
The currency reform followed the stabilization rather than substituting for it. On 1 January 1986 the new shekel replaced the old shekel at 1,000 old : 1 new, lopping three zeros off a price level that had finally stopped moving. Because the inflation was already broken when the zeros came off, the redenomination stuck. The new shekel remains Israel’s currency four decades later — proof that the order of operations matters: stabilize first, rename second.
The Turkish lira was never a hyperinflation in the technical sense, and that is precisely what makes it an instructive case: it was a high inflation that simply refused to end, grinding on for three decades until the currency had accumulated so many zeros it became a national embarrassment. From an average of roughly 9 lira to the US dollar in the late 1960s, the first lira slid to about 1,650,000 to the dollar by late 2001. The Guinness Book of Records named it the world’s least valuable currency for most of the years between 1995 and 2004. The largest banknote ever issued was the 20,000,000-lira note of 2001 — twenty million lira, worth perhaps a dozen dollars. The verdict is Redenominated, and the redenomination came not after a collapse but after a cure: on 1 January 2005 the New Turkish Lira replaced the old at 1,000,000 old : 1 new, striking off six zeros at a stroke.
The mechanism was chronic peacetime deficit monetization. For decades Turkish governments ran large budget deficits — driven by public-sector enterprises, agricultural support, populist spending cycles, and a heavy interest bill on domestic debt — and financed them in part through the central bank’s printing and through borrowing at punishing real interest rates. Annual inflation settled into a persistent band, routinely above 60% in the early 1990s and peaking at about 105% in 1994 amid a currency crisis. It is essential to be precise here: even at its worst, Turkish inflation never reached the Cagan hyperinflation threshold of 50% in a single month. It was a severe, chronic high inflation — the kind that does not produce a wheelbarrow-of-cash photograph, but quietly destroys savings, indexes the whole economy to the dollar, and forces banknotes to grow zeros year after year.
The crisis that finally forced the reckoning came in 2000–2001. An IMF-backed, exchange-rate-anchored disinflation program launched in December 1999 ran into a banking crisis and a speculative attack; in February 2001 Turkey was forced to float the lira, which promptly lost much of its value, and the economy contracted sharply. Out of that crisis came a genuine stabilization: a strengthened, more independent central bank, fiscal discipline, and a credible inflation-targeting framework that finally pulled annual inflation down to single digits by 2004 — the first time in a generation.
Only once the inflation was beaten did Turkey address the zeros. A law passed on 28 January 2004 authorized lopping six zeros off the currency, and on 1 January 2005 the New Turkish Lira (Yeni Türk Lirası) was introduced at 1,000,000 old lira to 1 new lira. The two circulated together through 2005; the “Yeni” prefix was itself dropped at the start of 2009, leaving simply the Turkish lira. This was a redenomination layered onto a stabilization that had already held — which is why it stuck, and why it belongs in the amber column rather than among the currencies that merely renamed their problem.