Getting out of currency protection will be difficult

It will not be easy to liquidate the exchange rate protection deposits (KKM), which were put into practice during the currency crisis of December 2021 and which today reach a volume of 3.3 trillion lira. The measures taken by the Central Bank with the aim of a gradual exit from the KKM have not yet initiated a complete exit from the system. KKM experienced a limited decline of 15.7 billion TL in the week of September 1-8, as in the previous two weeks. According to weekly data from the Banking Regulation and Supervision Agency (BDDK), the size of KKM decreased by 15.7 billion lira compared to the previous week, falling to 3 trillion 332 billion 606 million lira as of 8 September. The total drop since August 20, when the Central Bank (MB) announced the goal of converting currency-protected deposit accounts into TL deposits, reached 75.34 billion lira. Sources from the banking sector point out that this decrease in KKM volume is not at the level desired by the Central Bank.

REMEMBER 300 BILLION

As KKM’s exit continues in small steps, the Central Bank yesterday increased the required reserve rate (RR) for KKM from 15 percent to 25 percent for maturities of up to 6 months. For maturities longer than 6 months, it was reduced from 15 percent to 5 percent. Four bankers consulted by Reuters estimate that with this CBRT measure more than 250 billion TL and nearly 300 billion TL of liquidity will be withdrawn from the system. With its change to TL-denominated reserve requirements, CBRT began applying a 15 percent reserve requirement to KKM accounts for all maturities in July. During this period, almost 500 billion TL of liquidity was withdrawn from the system.

Postpones the cost until after the election

– Former Central Bank economist Prof. Dr. İbrahim Ünalamış commented the following about ZK’s decision in a television program he attended: “With this decision, the Bank shows that it does not want the KKM in the short term, which constitutes the majority in the system, and that if you want to stay in the system, you want it to target accounts with a maturity greater than 6 months. This coincides with local elections. “Perhaps they want to optimize costs by postponing the maturity of KKM until after the elections.”