LONDON, Dec 21 (Reuters Breakingviews) - Turkish President Tayyip Erdogan is getting desperate. The strongman, whose re-election chances have taken a knock from a plunging lira, is promising to protect savers from future declines in Turkey’s currency. It’s a tacit admission that the banking system isn’t immune to the fallout from his whacky view that interest rates cause inflation. But putting taxpayers on the hook for the lira is asking for trouble. The one positive is Erdogan’s apparent recognition that the status quo is not sustainable. In particular, Turkey’s banking system, lauded for its stability, could come under pressure if customers panicking about the lira’s almost halving in value in a matter of months empty their accounts and switch their savings into dollars. The guarantee is a bid to break the link between low interest rates and currency depreciation by encouraging regular Turks to back his commitment to low rates with their savings. That’s where the positives end. The currency’s wild gyrations since the announcement don’t bode well for financial stability. The greater danger is that guaranteeing the value of lira deposits opens up the guarantor – ultimately the taxpayer in this case – to potentially infinite losses if the currency gets sucked into an inflationary spiral. Government attempts to take on currency markets have a habit of ending badly. Just ask the Brits, who tried and failed to keep sterling inside the European mechanism in 1992. Closer to home, Turkish depositors have been burned by Erdogan’s calls to keep their savings in lira in the past. Only those captivated by his nationalist rhetoric about protecting the country from evil speculators are likely to heed the call and stay the course. The addition of unquantified but potentially massive exposure on the sovereign balance sheet threatens the other still-standing pillar of the economy – low levels of government debt, at just 40% of GDP. That’s why Turkey’s credit default swaps soared, reflecting the greater risk of an Ankara default. Erdogan’s dangerous policy experiment is shaking Turkey’s few remaining economic foundations. Follow @dasha_reuters on Twitter CONTEXT NEWS - Turkish President Tayyip Erdogan on Dec. 20 announced a series of steps that he said would ease the burden of a weakening currency, including a government pledge to guarantee lira bank deposits. - The finance ministry said on Dec. 21 that banks would be able to offer the new instrument, which would compensate account holders for the difference between currency depreciation versus a set foreign exchange rate and the yield on their deposits. - The lira hit a record low of 18.4 against the dollar on Dec. 20, but rallied strongly after Erdogan’s comments. The currency was at 12.74 by 1200 GMT on Dec. 21.