Given the debt’s vast size, creditors will need to make concessions. These may take the form of haircuts on principal, moratoriums on interest (which worked well in a recent large restructuring of Zambia’s debt) or maturity extensions. Just how much the owners of the obligations can expect to claw back will depend on how far and how fast Venezuela’s wrecked economy can be revived under new stewardship. At the moment it is in tatters. Between 2012 and 2025 GDP contracted by two-thirds. But details about the economy’s actual state are scarce. The IMF, which publishes annual economic analysis of each member country, last did so for Venezuela in 2004. It put dealings with the government on hold entirely in 2019 and resumed them only in April. The main source of comfort to creditors is the oil industry. Estimates by JPMorgan Chase, a bank, and the Council on Foreign Relations, a think- tank, suggest that up to $20bn in investment could increase Venezuela’s oil output by 0.5m barrels per day (b/d) in a couple of years, to around 1.5m b/d. If the price of Venezuela’s bituminous crude averages $60 a barrel, this could raise annual exports by roughly $10bn. With investments of $100bn, production could rise by as much as 2m b/d and yearly export proceeds by $40bn after a decade. A more ambitious recovery plan—perhaps backstopped by America, where Mr Trump is trying to drum up investment in Venezuelan crude—might seek to restore the country’s GDP to its heyday in the early 2010s. Doing so would better equip the government to honour its debts. It may also ultimately require fewer total concessions from creditors. To increase the likelihood of such a happy long-term outcome, those creditors may need to be more generous in the short run. They will be more willing to oblige if Ms Rodríguez can convince them that Venezuela has forsworn Mr Maduro’s kleptocratic ways for good. Making the current deal less opaque would be a good place to start.■ For more expert analysis of the biggest stories in economics, finance and markets, sign up to Money Talks, our weekly subscriber-only newsletter. This article was downloaded by zlibrary from https://www.economist.com//finance-and-economics/2026/07/02/unpacking-venezuelas- peculiar-debt-restructuring

Finance & economics | Dubai-on-Bosporus Turkey’s economic plan to win from the Iran war The country is a case study in the spillovers of conflict—both positive and negative July 2nd 2026 WAR LEAVES behind economic wreckage. Over the past four months it has caused $600bn-worth of damage to Iran, according to the IMF, and up to 7% of the workforce have lost their jobs. The economies of Iran’s richer Gulf neighbours have shrunk and the conflict may knock two percentage points off GDP growth in the broader Middle East this year. For Turkey, a large economy perched between the volatile region and Europe, the fighting in the Gulf has been a mixed blessing. Soaring oil prices pushed monthly inflation above 4% in April for only the second time in a year. The central bank burned through more than half of foreign reserves propping up the lira. Yet trouble next door is also an opportunity. “The Gulf

has lost a lot of business in the past few months,” says a finance-ministry official, “and we think we could take some of it.” Istanbul, and Turkey more broadly, is already becoming a commercial roundabout for business between Central Asia, the Middle East and Europe —shabbier than the Gulf’s, but bustling. Some shoppers browsing the boutiques in the city’s posh Nisantasi neighbourhood say they would be in Dubai were it not for the war. Across the Bosporus, Turkey’s third-biggest cargo terminal is nearly overflowing. Dock workers, on a cigarette break before overtime, say volumes have tripled since the Strait of Hormuz closed. Turkish ports have never handled this many shipments in spring. More fossil fuels are flowing through pipelines that cross Turkey, connecting Europe to energy suppliers. Flows through the Kirkuk-Ceyhan oil pipeline from Iraq are set to be three times higher in August than in April. Turkey wants more. Iran’s chokehold over the strait has revived plans for at least three railways and road networks from the Middle East to Europe. All, officials hope, will attract foreign investments worth billions of dollars. The Hejaz Railway, for instance, would carry crude oil and passengers from Saudi Arabia. Officials insist more visitors, like those shopping in Istanbul, will soon transform industries from tourism to entertainment. Turkey’s defence industry, which has been pumped with state handouts in recent years, exported roughly as many arms as Germany in 2025. Since February, according to two Turkish officials, three Gulf countries have started negotiations for arms deals. Another big prize for Turkey would be to attract investors displaced from the Gulf. The Istanbul Financial Centre (IFC), a gleaming island of glass towers which opened in 2023 to house global financial firms, was until February home only to state-owned banks and regulators. Now Ahmet Ihsan Erdem, the IFC’s boss, and Mehmet Simsek, Turkey’s finance minister, are boasting of 40 Gulf banks and consultancies seeking to move in. In May the government offered tax breaks for foreigners (and special perks for IFC residents).

Under Mr Simsek and the equally reasonable Fatih Karahan, who leads the central bank, Turkey’s economic management is no longer as batty as before (a few years ago President Recep Tayyip Erdogan insisted that higher interest rates caused inflation). In 2025 growth was a solid 3.6% and annual inflation fell by 24 percentage points to 35% (see chart). Since February tourists and cargo have helped cushion the energy shock, and the April ceasefire tamed price rises to just 1.7% in May. Yet Messrs Simsek and Karahan have their work cut out. The war has strained Turkey’s budget and balance of payments. Tax breaks on fuel, which have helped contain high energy prices, could cost 0.6% of GDP. Between January and April foreign reserves fell from $79bn to $18bn, as the central bank sold dollars in pursuit of a stable lira. Although reserves have now stabilised, selling more of them without earlier replenishment could lead to a further loss of faith in the central bank and to inflation that eventually forces the government to impose capital controls. Some Western financiers fear a return to fiscal and monetary folly—not least because the sensible Mr Simsek has reportedly fallen out with Mr Erdogan. Foreigners have withdrawn at least $10bn from Turkey since the Iran war began.

Many Gulf escapees are choosing other destinations. Hedge-fund managers fleeing Dubai prefer Miami and Milan to Istanbul. High-rolling executives in search of good schools for their offspring favour London or Geneva. Judging by conversations with a dozen of the IFC’s new residents, most employ fewer than 50 people in Istanbul. Few foreign shoppers strolling around Nistantasi say they plan to return. A boom in logistics and shipping, which make up less than a tenth of the Turkish economy, has limited impact by itself. War next door affords Turkey a chance to shed its reputation as an economic basket case. But it will take more than that to turn it into an economic marvel.■ For more expert analysis of the biggest stories in economics, finance and markets, sign up to Money Talks, our weekly subscriber-only newsletter. This article was downloaded by zlibrary from https://www.economist.com//finance-and-economics/2026/06/29/turkeys-economic-plan- to-win-from-the-iran-war

Finance & economics | Free Exchange Are stablecoins money? Policymakers’ job is to make them safe as well as useful July 2nd 2026 IN TEXTBOOKS MONEY is a means of exchange, a store of value and a unit of account. In life it is a giant confidence trick: people trade with it, save it and keep count with it because everyone else does. Notes are just slips of paper; coins, mere alloy. Most money is simply data: some in the form of “reserves”, liabilities of the central bank; much more of it created by banks calling loans and deposits into being at a keystroke. The trick works because of three things. First, singleness: a dollar in one bank is worth the same as one in another and, if you want it, as a dollar bill from the Federal Reserve. Second, transferability: dollars move more or less frictionlessly between banks, people, businesses and governments. Third, elasticity: the supply of money adjusts as required—usually quite calmly, as

banks extend or rein in lending, but in a crisis, pouring forth from the central bank, the lender of last resort. There is nothing natural about this set-up. As a report by the Centre for Economic Policy Research (CEPR), an international network of economists, points out, it is an institutional arrangement, sustained by banks’ access to central-bank liquidity, deposit insurance, bank-capital rules and more. As circumstances change it adapts, for better or worse. Just now, digital innovations—a giddying lot of changes if ever there was one—pose an awkward question to those in charge of the arrangement: how to make the system more efficient without making it any less safe? Lately they have been paying a lot of attention to stablecoins—an example chewed over in the CEPR report and the sole subject of another new study, by the Bank for International Settlements (BIS), the central banks’ central bank. Stablecoins are privately issued digital currencies, which unlike (say) bitcoin are guaranteed by their creators to maintain their value against a reference asset. Of those pegged to fiat currencies, 99.4% by value are tied to the dollar, according to the BIS. These are led by USDT, issued by Tether, a company incorporated in El Salvador, and USDC, from Circle, based in New York. (Neither is a bank, but Circle now has a banking subsidiary.) Dollar stablecoins are backed mainly by Treasury bills, reverse repos and bank deposits, though Tether has some higher-yielding reserve assets. Their total worth exceeds $300bn, equal to around 1% of the outstanding value of Treasuries. They are still mainly used for trading crypto assets. But there are several other ways you can see stablecoins making payments slicker and financial intermediation more competitive. Combined with smart contracts, they can also speed up settlements and payments, obviating the need to go through a long chain of lawyers and banks. They promise faster and cheaper cross- border payments than on conventional rails. Besides crypto trading, another increasingly popular function is to provide exposure to dollars in emerging economies, where local currencies are less reliable.