ISTANBUL -- In a bid to attract gold held by households into the economy, Turkey has begun issuing gold-backed government bonds in exchange for physical gold.

The government promises to redeem the bonds a year later in gold-- plus interest in Turkish lira -- but gold-loving Turks are finding it hard to let go of the precious metal.

People in countries long mired in low inflation or deflation often resort to hoarding cash. Turks save gold and foreign currency as a backstop for emergencies. This is especially true now as the lira continues its slide.

Golden opportunity?

The government is in full marketing mode as it calls for citizens to exchange their physical gold for the bonds, which were first issued in October. A TV commercial titled "Government-Guaranteed Happy Gold" features an elder coin with moustache and walking stick appearing from under a mattress complaining; "I will not help anybody if I stay here."

Turkey's savings rate is low, and its current-account balance is chronically in the red. But demand for gold as ornaments and gifts is strong.

This macroeconomic imbalance concerns global financial markets. Turkish households held an estimated 3,500 tons or more of gold in 2015, according to the World Gold Council, a market research organization for the gold industry.

The government wants to inject some of this into the financial system in order to raise its outstanding balance of deposits.

Since 2013, citizens have been allowed to open "gold deposit accounts" at banks by bringing their physical gold. Holding gold at banks is helping central bank's foreign reserves, since gold savings are partially incorporated as required reserves.

For the first issuance of gold-backed government bonds in October, branches of the biggest state-run bank assessed the value of gold items -- including coins -- and exchanged them for one-year government bonds, which return an annual interest of 2.4% in lira at maturity. The government also floated Islamic bonds, or sukuk, for devote Muslims.

According to Alper Kalyoncu, head of precious metals division in Garanti Bank, gold-backed bonds are attractive for holders who insist to keep gold coins at maturity.

Previous gold deposit account campaign to collect gold only attracted about 60 tons over some four years, according to Mr.Kalyoncu's estimations. It was largely because redemptions were in lira or foreign currency. As the lira sinks, people feel safer if they are assured of receiving gold coins at maturity, experts noted.

Slow start

Public reaction to the gold-backed bonds has been lukewarm. In the first month after their issuance, some 2.5 tons of gold was collected, according to Deputy Prime Minister Mehmet Simsek -- less than 0.1% of gold held by households.

The less than enthusiastic response has not deterred the government. Simsek said it will continue floating the bonds and ramp up marketing.

Whether people will eventually warm to the bonds is uncertain, as Turks like to hold physical gold. "Because of my doubts over the future of the country and banking industry, I always want to keep gold on hand," said a 21-year-old banker, who plans to marry soon and will likely receive a large number of congratulatory gold coins at the wedding. The banker expressed zero interest in the gold-backed bonds.

The country's past financial crisis and hyperinflation have instilled distrust in the lira, giving rise to "under-the-mattress" gold as a way to protect wealth. The metal is widely given as a gift on special occasions, such as weddings or the birth of a child.

Gaining public trust in its monetary policy is proving difficult for Turkey, especially as the lira continues to depreciate against major currencies and relations with the U.S. and Europe remain strained.

With Turkey commanding a geopolitically critical location linking Europe and the Middle East, the problem the country has steering its monetary policy seems to symbolize the uncertainty facing the rest of the global economy.