Turkey strengthens lira efforts
The Turkish central bank announced on Saturday new measures to 'strengthen the monetary transmission mechanism and support the transition to the Turkish lira,' within its macroprudential framework.
The Central Bank of the Republic of Türkiye (CBRT) said that the growth targets for real-person liras deposit shares have been increased for banks with a share below 60%, while a monthly growth target of 0.4 points has been introduced for banks with a share between 60% and 65%.
It also said that the reserve requirement ratio for FX-protected deposit accounts or so-called KKM has been lifted to 40% from 33%.
Likewise, the minimum interest rate applicable to KKM accounts has been lowered from 50% to 40% of the policy rate.At the same time, the target for the transition of KKM accounts to Turkish lira has been abolished, it said, while the total target for KKM renewals and transition to lira has been maintained.
The KKM scheme, which aimed to shield depositors against lira depreciation, was adopted in late 2021, but authorities, as a broader shift in ecomomic policy have been seeking to phase it out gradually and transition deposits into regular lira accounts.
Floating-rate lira deposit accounts can now be opened with maturities longer than one month, the bank also said.
Furthermore, the CBRT has also set the reserve requirement ratios for CPI, PPI and TLREF-indexed deposits at 10% for all maturities.
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