ANKARA(BullionStreet): Turkey's Banking Regulation and Authorization Agency (BDDK) is under attack from Istanbul Chamber of Jewelers for it’s decision to empower banks to buy and sell gold coins.

Istanbul jewelers have filed a complaint to the Council of State against the banking watchdog, citing competitiveness concerns.

Jewelers in their complaint said small tradesmen working in Turkey's traditional gold sectors will be neglected and sidelined as they cannot compete with big banks.

Banks have been collecting gold as the Central Bank raised the required reserve ratio for lira liabilities that can be held in gold from 10 percent to 20 percent last year.

These banks with extensive gold reserves urged the Central Bank to obtain permission to sell gold. Despite the objections of jewelers, the BDDK introduced regulation that permits banks to sell and buy gold coins.

More rivals for jewelers appeared on the scene yesterday as Turkey's post office announced it will also begin to coin gold merchandise at 14 headquarters in 13 cities, signing an accord with the Istanbul Gold Refinery.

The jewelers based their objections to bank gold sales on the idea that gold coins are not a financial instrument but a commodity, meaning bank involvement in the business is illegal.

The chamber also pointed out that the state loses its tax income with this regulation. According to value-added tax code, the state only receives taxes from gold bars.

This leaves banks exempt and allows them to conduct duty-free commercial transactions that are normally subject to tax.

Meanwhile, the Istanbul Gold Refinery presented a report to the Turkish Central Bank suggesting the bank provide some parts of the required reserve ratio by collecting coin and scrap gold from people so that it can be contributed to the economy.