Transfer interest to banks.

dollar The government, which commissioned the Protected Depository of Currency (KKM) to control the currency exchange difference bill of more than 800 billion lira in the last two years, is now preparing to remove this system from the table. The first step out of the KKM, which took effect in December 2021, grew rapidly with incentives and coercion before the elections and approached $125 billion, was taken the day before. With the dollar, which was below 20 TL before the elections, topped 27 TL in August, the KKM banknote also collapsed.

DIRECTED TO THE BACK DOOR

When the government bill reached an astronomical TL 300 billion in August, the first step was taken, but economists say it’s hard to get out completely. The experts pointed out that instead of using the policy rate to balance the money markets, the Central Bank again looked for a back door and passed the interest rate increase on to the banks. He emphasized that although the management of the economy has changed, monetary tightening continues to be carried out through banks and the market, not through increases in policy rates. Thus, the debate on the increase in ‘hidden interest’ came to the fore again.

MAY INCREASE TO 35-40 PERCENT

In accordance with the Central Bank (CBRT) regulation, the objective of converting overdue KKM accounts into standard TL deposits was introduced. Until the end of the year, banks will have to spend at least 50 percent of KKM volume for accounts that pass TL, and at least 5 percent of KKM volume for accounts that pass foreign currency, to standard TL deposits. There will be an obligation to issue low-interest government bonds as a kind of penalty for missing parts. In the sector, interest on TL deposits with a maturity of less than three months rose to around 40 percent during and after the election period, falling below 30 percent in recent weeks. Since banks will prefer to increase deposit rates rather than buy Treasuries, an increase in deposit rates of around 35-40 percent across the sector is expected.

WHAT DID THEY SAY?

teacher. Dr Hakan Kara:

Instead of complex tasks interest can be increased

“CBT It tells banks to convince depositors who have transferred from TL to KKM to switch to TL deposits again. Kill two birds with one stone, it will increase the interest on the deposit while melting the KKM. Of course, official interest could have increased without getting involved in these complex issues, but obviously the insistence there continues. As the demand for foreign currency may increase during the dissolution of the KKM, the CBRT may lose reserves, it is trying to compensate with reserve requirements.”

Economist Dr. Mahfi Eğilmez:

Under the pillow of your coin can lead to withdrawal

“EXCHANGE RATE Recent regulations on Protected Deposits can make coins hidden. This is what happens if you don’t correctly determine interest in economies like ours, where capital movements are free and money is not reserve money.

Economist Uğur Gürses:

One of the new members of PPK There is no hope, they are spinning the ball.

“TO THE BANKS now it aims to renew the KKM. Otherwise, a low interest ‘securities penalty’ will apply. Obviously, the newly appointed MPC members have no hope of correcting the TL interest rate; they overturned the work in “throwing balls”…”

Economist Dr. Murat Kubilay:

until local elections they will not step

“KKMThe stability of the exchange rate and the control of inflation are essential for the abolition of the . Without these, bookings will not improve, and neither will the KKM. They will not take a step to solve them before the local elections, we are not sure even after. With this decision, some of the inputs from TL to KKM are transformed using mostly secondary methods, apart from this, banks are under penalty of holding government bonds and public financing is provided.

Currency Protection Bill Passes $800 Billion

Banking According to data from the Agency for Regulation and Supervision (BDDK), as of August 11, there are 3 trillion 357 billion lira ($124.7 billion) in KKM’s accounts. As of July 2023, the exchange difference payments of economists, the Ministry of Finance and the CBRT, which have been following the public’s KKM bill since the beginning of implementation, reached TL 500 billion. . As the censorship of CBRT’s KKM data continues, the exact figures are not known, but according to expert calculations, the exchange rate difference to be paid by CBRT in August is expected to exceed TL 300 billion. Therefore, it is estimated that KKM’s bill to the public so far will exceed TL 800 billion. With the dollar, which was below 20 TL before the elections, topped 27 TL in August, the KKM banknote also collapsed.

Eyes will be on the MB interest rate decision

Center Following CB regulations that would allow deposit and loan rates to be significantly higher than the policy rate, eyes turned to this month’s interest rate decision from the Monetary Policy Committee (MPK). . Although the CBT has taken the first step to reduce the KKM, according to bankers, the decision is an indication that interest rate hikes will remain limited. Economists participating in the AA Finans expectations survey predict that the one-week repo rate (policy rate) will rise by 250 basis points to 20 percent. However, this week, there was an expectation that the Fed will skip this month and hold the policy rate constant. After the 900 basis point interest rate hike, which was below expectations, the CBT will make its interest rate decision on Thursday with the revamped MPK staff, which also included Cevdet Akçay, Fatih Karahan and Hatice Karahan.
will explain.