‘Continue tightening’ signal from the Central Bank

‘Continue tightening’ signal from the Central Bank

‘Continue tightening’ signal from the Central Bank

Accordingly, the required reserve ratio on currency-protected deposits (KKM) was increased and an additional required reserve ratio was introduced in TL for foreign currency deposits. Therefore, excess TL liquidity in the market will continue to be withdrawn from the system increasing the required reserve ratio. At the same time, the transition from KKM deposits to TL deposits will be encouraged.

– The required reserve ratio on KKM with maturities of up to 6 months was increased from 25 percent to 30 percent.

According to the statement, the ratio of mandatory reserves with a maturity of up to 6 months, where KKM is concentrated, increased by 5 points, to 30 percent. The required reserve ratio for those with maturities of up to 1 year and those with maturities of 1 year or more was increased from 5 percent to 10 percent.

In September, the CBRT increased the required reserve ratio for maturities of up to 6 months, where KKM is concentrated, from 15 percent to 25 percent, and set the required reserve ratio for maturities of up to 1 year and 1 year or more by 5 percent.

– 4 mandatory reserve points denominated in TL for foreign currency deposits

The required reserve ratios for foreign currency deposits and participation funds were increased by 1 point for all maturities.

To remove excess TL liquidity in the market from the system and support the transition to TL deposits, it was decided to apply an additional 4 percent reserve requirement to foreign currency deposits with all maturities, which will be set at TL .

– The reserve exemption required for investments obtained abroad has been expanded.

In order to encourage investments from abroad, the reserve requirement exemption period for these resources was extended from December 31, 2023 to the end of 2024.

In line with changes to securities regulations under simplification measures, the 20 per cent reserve requirement for commercial loans granted by financial companies was removed.

With the decision of the Monetary Policy Committee on October 26, 2023, the CBRT shared with the public that the monetary transmission mechanism will continue to be strengthened with additional measures to increase the proportion of TL deposits and that it will continue to provide selective credit. and quantitative tightening decisions that will support the monetary tightening process as well as the increase in interest rates.

The CBRT then introduced export credits and ease of application for businesses’ access to credit within the scope of simplification, along with measures to increase TL’s participation in the banking system.

To facilitate business access to credit, the practice of establishing 30 per cent guarantees for loans granted by banks and the practice of loans against invoice were ended.

The practice of providing guarantees based on the interest rate applied by banks to TL commercial loans above 1.8 times the reference rate was abolished. In line with data showing that the transition to TL is accelerating, the TL share increase target, which was previously increased from 2 percent to 2.5 percent monthly for real people, was increased to 3, 5 percent monthly.

The goal of increasing TL participation, which aims to increase the share of standard TL deposits in total deposits, was removed from the securities practice and added to the practice of charging a commission on the required reserves established by the banks for deposits in foreign currency. (AA)

Interest of the Republic Central Bank Currency Turkish Lira Türkiye Application

Source: Sozcu

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