The Central Bank’s emphasis on liraization
The Central Bank (CBRT) published the first Financial Stability Report of 2023.
In the report, it was stated that under the ‘Liraization Strategy’, TL’s weight in public, domestic, real sector and banking balance sheets is increasing.
Furthermore, it was stated that banks have sufficient and robust liquidity reserves against liquidity shocks, while banks have limited currency positions within legal ratios.
The increase in TL deposits, backed by KKM accounts, was the determining factor in the increase in the liraization rate.
CBRT: INCREASES THE WEIGHT OF THE LYRE
Highlights of the first of the CBRT’s semi-annual Financial Stability Report were as follows:
* Although the weight of TL-denominated assets and financial instruments other than deposits in the composition of household financial assets continues to increase, the deposit liraization rate tends to increase.
* The growing motivation of banks to meet their deposit liraization target indicates that this trend may continue.
* Households diversify their savings by increasing their investments in non-deposit financial assets, such as stocks, mutual funds, and pension systems.
* Although the share of TL in the liabilities of the real sector has increased, companies borrow mainly in TL.
* The share of TL-denominated assets in the asset composition of companies is also increasing, and the trend of improvement in the total and short-term foreign exchange position continues.
* After targeted lending policies, the share of SMEs, export and investment loans in TL trade loans increased, while the access of SMEs and export companies to finance is becoming stronger.
* As a result of measures taken to support the effectiveness of the monetary transmission mechanism, TL’s commercial loan interest rates converged significantly to the policy rate.
* The banking sector has strong foreign currency liquidity buffers. Although the share of external debt in the composition of bank financing has fallen to historically low levels, the weight of deposits continues to rise.
* In addition to the deposit-weighted funding structure, the increase in TL’s share of balance sheets supports the liquidity outlook for the sector.
* With the strengthening of the tendency of depositors to TL deposits, the decrease in short positions in the banks’ balance sheets continues. Banks keep their foreign currency positions well below legal rates.