The Turkish lira is used in the areas of the Republic of Cyprus in which the Government does not exercise effective control, while the euro is used in the areas it does. European Union law suspends the acquis in the first set of areas under Protocol No 10 of the 2003 Act of Accession, and Council Regulation (EC) No 866/2004 governs the crossing of persons and goods without addressing currency at all. The European Commission's annual reports record the practical consequence: people and cash cross, and the inability to transfer funds between banks on the two sides continues to hamper trade across the line.
A currency used outside the country that issues it is usually held as reserves, used to invoice trade, or carried as cash. Cyprus is a fourth case. The Turkish lira is the money people spend on one part of the island, and it is not the money people spend on the other, and the boundary between them runs through a single state.
Key Takeaways
- The euro is used in the areas the Government of the Republic of Cyprus controls; the lira in the areas it does not.
- European Union law suspends the acquis in the second set of areas and says nothing about currency.
- Millions of crossings a year take cash across the line in both directions.
- Bank funds cannot be transferred between the two sides, which the Commission records as hampering trade.
- Recorded trade across the line is small, at EUR 16,046,304 in 2023.
The formulation European Union law uses
Careful, and worth quoting rather than paraphrasing.
Protocol No 10 of the 2003 Act of Accession suspends the application of the acquis, pending a settlement, in the areas of the Republic of Cyprus in which the Government of the Republic of Cyprus does not exercise effective control. Article 3 of the same protocol permits measures fostering economic development despite that suspension.
Council Regulation (EC) No 866/2004, made under that article and known as the Green Line Regulation, sets out the rules for crossing the demarcation line. Article 2 requires that all persons crossing be subject to at least one check to establish their identity. Article 4 allows goods to enter the government-controlled areas where they are wholly obtained in the areas the Government does not control, or last substantially transformed there, and provides that such goods are not subject to customs duties or charges of equivalent effect and need no customs declaration, so long as they are not eligible for export refunds or intervention. The quantities crossing are recorded.
The regulation contains no provision about currency at all. Nothing in it says which money may be used, carried or accepted. The currency boundary is a consequence of the situation the instruments describe, not a term any of them sets.
What actually crosses
People in very large numbers, goods in small ones.
The Commission reports on the regulation's implementation every year, using statistics provided by the Republic of Cyprus. For 2023 it records 2,452,876 crossings by Turkish Cypriots, against 1,877,463 the year before, and 1,098,508 crossings by Turkish Cypriot vehicles against 881,920. In the other direction it records 2,194,347 crossings from the government-controlled areas by European Union citizens other than Cypriots and by third country nationals, against 1,840,207.
Set against that, the recorded trade is small. The total value of goods crossing with accompanying documents rose 9.6 per cent in 2023 to EUR 16,046,304, with building and construction materials the most traded item, followed by furniture, plastics and mosaics.
The Commission also records why some of those crossings happen, and it is a currency reason. It reports that the favourable exchange rate of the euro against the Turkish lira encouraged increasing numbers of Greek Cypriots to cross to the Turkish Cypriot community for their personal shopping. A price difference produced by two currencies is, in that account, part of what moves people across the line.
| What the Commission records for 2023 | Figure |
|---|---|
| Crossings by Turkish Cypriots | 2,452,876 |
| Crossings by Turkish Cypriot vehicles | 1,098,508 |
| Crossings by other EU citizens and third country nationals | 2,194,347 |
| Value of goods crossing with documents | EUR 16,046,304, up 9.6 per cent |
The part that does not cross
Bank payments.
This is the finding that makes the arrangement a currency story rather than a border one. The Commission's report states that the inability to transfer funds between banks in the government-controlled areas and banks in the areas not under the effective control of the Government continued to hamper trade across the line, and that it engaged with the authorities and other stakeholders on the issue.
Two economies separated by a few metres, with millions of personal crossings a year, and no route between their banking systems. Everything that moves has to move as cash, in person, or not at all.
The access question sits alongside it. The Commission records that Turkish Cypriots trading across the line encounter difficulties opening accounts with banks in the government-controlled areas, and that the authorities have taken steps: on 26 April 2023 the Central Bank of Cyprus issued a circular letter to all credit institutions clarifying that Turkish Cypriots holding Republic of Cyprus passports or identity cards are entitled to open a payment account with basic features, subject to the usual customer identification requirements. It then records what happened next, which is that individuals continued to report difficulties with commercial banks and that Turkish Cypriot businesses were unable to open accounts at all.
A right to an account and an account are different things, and the report is unusual in tracking both.
Why this is a distinct kind of foreign use
Because the currency is doing its full domestic job somewhere its issuer does not administer.
The three familiar ways a currency is used abroad are covered separately in the three ways a currency is used abroad: as a reserve asset, as a vehicle for invoicing trade between third countries, and as physical cash alongside a local currency. Each of those is a partial use. Prices are still set locally, wages are still paid locally, and the domestic unit still exists.
Here there is no second unit. The lira is the unit of account, the medium of exchange and the store of value for everyday purposes in those areas, and the institution that issues it has no mandate covering them. Monetary policy is set for one economy and lands on two.
That produces a specific and unusual exposure. A household on one side of the line holds a currency whose interest rate, inflation and exchange rate are decided elsewhere, with no domestic authority able to respond and no banking route to the currency used a short distance away.
What this means for a conversion from Australia
That the destination decides the currency, and the destination is smaller than the country.
Anyone sending money to Cyprus is sending euro if it is going to the government-controlled areas. Anyone converting for the areas beyond the line is dealing in Australian dollars to Turkish lira, and the practical constraint the Commission documents applies: the banking systems either side of the line do not connect to each other, so the route in matters as much as the currency.
Where to look next
what has to exist for a currency to cross a border sets out the general preconditions, and how international transfers work covers the mechanics a missing banking link would otherwise use. For the live figures, see the AUD to TRY page.
Sources
- European Commission, Annual report on the implementation of Council Regulation (EC) No 866/2004, COM(2024) 265 final, 4 July 2024 - the 2023 crossing figures of 2,452,876 by Turkish Cypriots against 1,877,463 previously and 1,098,508 by Turkish Cypriot vehicles against 881,920, the 2,194,347 crossings by other EU citizens and third country nationals against 1,840,207, the report that the favourable exchange rate of the euro against the Turkish lira encouraged increasing numbers of Greek Cypriots to cross for personal shopping, the difficulties Turkish Cypriot traders report in opening accounts in the government-controlled areas, the Central Bank of Cyprus circular letter of 26 April 2023 on basic payment accounts for holders of Republic of Cyprus passports or identity cards, the continuing difficulties for individuals and the inability of Turkish Cypriot businesses to open accounts, and the inability to transfer funds between banks on the two sides continuing to hamper trade
- Council Regulation (EC) No 866/2004 of 29 April 2004 - the demarcation line, the suspension of the acquis under Protocol No 10 of the Act of Accession in the areas in which the Government does not exercise effective control, Article 3 of that protocol permitting measures fostering economic development, the Article 2 requirement that all persons crossing be subject to at least one identity check, the Article 4 treatment of goods wholly obtained in those areas or last substantially transformed there, their exemption from customs duties and charges of equivalent effect and from a customs declaration where they are not eligible for export refunds or intervention, the recording of the quantities that cross, and the absence of any provision concerning currency
- European Commission, Annual reports on the implementation of the Green Line Regulation - the series these figures are drawn from, and the trade value of EUR 16,046,304 crossing with accompanying documents in 2023, up 9.6 per cent, led by building and construction materials
General information about currency use across administrative boundaries. Not financial advice, and not a recommendation of any product or institution. Reviewed by the Tradergy editorial team, September 2026.
Common questions
What currency is used in the north of Cyprus?
The Turkish lira. The euro is the currency of the Republic of Cyprus, and it is used in the areas the Government controls. In the areas of the Republic in which the Government does not exercise effective control, which is the formulation European Union law uses, the currency in daily use is the lira issued by Turkey.
Does European Union law say anything about the currency?
No. Protocol No 10 of the 2003 Act of Accession suspends the application of the acquis in those areas pending a settlement, and Council Regulation (EC) No 866/2004 sets out the rules for the crossing of persons and of goods across the demarcation line, including identity checks under Article 2 and the treatment of goods under Article 4. Neither addresses currency or cash. The currency boundary is a consequence of the arrangement rather than a term of it.
Can money be transferred between the two sides?
Not between banks. The European Commission's annual report on the implementation of the regulation records that the inability to transfer funds between banks in the government-controlled areas and banks in the areas not under the effective control of the Government continued to hamper trade across the line, and that the Commission has engaged with the authorities on the issue.
Can a Turkish Cypriot open an account on the other side?
An individual with the right documents can, in principle. The Commission records a circular letter issued by the Central Bank of Cyprus on 26 April 2023 to all credit institutions, clarifying that Turkish Cypriots holding Republic of Cyprus passports or identity cards are entitled to open a payment account with basic features, subject to the usual customer due diligence. It also records that individuals continued to report difficulties in practice, and that Turkish Cypriot businesses were unable to open accounts in the government-controlled areas.
How much crosses the line?
A great many people, and a modest amount of recorded trade. On statistics provided by the Republic of Cyprus and reproduced by the Commission for 2023, there were 2,452,876 crossings by Turkish Cypriots and 1,098,508 by Turkish Cypriot vehicles, and 2,194,347 crossings from the government-controlled areas by European Union citizens other than Cypriots and by third country nationals. The total value of goods crossing with accompanying documents rose 9.6 per cent to EUR 16,046,304.