Simplification step in the application of Central Bank commissions

The Central Bank of the Republic of Turkey (CBRT) made new regulations to support the simplification steps in securities and required reserve practices.

In the instruction sent by the CBRT to the banks, changes were made to incentivize the application of commissions to the required reserves in foreign currency and the transition to time deposit accounts in Turkish lira (TL) without exchange rate protection.

COMMISSION REQUEST CHANGE

The 60 percent commission rate applied to foreign currency reserve requirements, which was set at 8 percent to be differentiated based on TL’s participation, was lowered to 57 percent.

With the amendment, it was established that a commission of zero percent will be applied to banks with a participation of TL of 57 percent or more, and a commission of 3 percent will be applied to banks with a participation of 50-57 percent. hundred.

Also, banks whose TL share will fall below 57 percent were given an additional 4 weeks to hit the target again.

CALCULATION OF TL SHARE AND EXCHANGE CONVERSION RATE

It was decided that amounts transferred from foreign currency deposit accounts or currency protected accounts to TL deposit accounts with a maturity of at least 3 months without currency protection should be taken into account in the calculation of the TL share, which is used as basis for the determination of the obligatory reserve and of the constitution and commission rates of securities, and in the calculation of the conversion ratio in the application of the constitution of securities.

THE SIMPLIFICATION PROCESS CONTINUES

In the decision of the Monetary Policy Committee of June 22, 2023, it was indicated that the existing micro and macroprudential framework would be simplified with a gradual approach based on impact analysis, and the first step in this context was taken on June 25. and announced to the public.

The weight of TL, which was reduced from 60 percent to 57 percent for the obligation to establish securities on June 25, was also reduced to the same level by determining the FX required reserve ratio by an additional 5 percentage points on June 8. July.

Additionally, banks that fell below the target were given additional time to get back on target.

The measures taken by the Central Bank to promote the transition to term deposit accounts in Turkish lira without currency protection are considered complementary to the measures taken on June 25 and July 8 regarding simplification. (AA)