Central Bank took new macroprudential measures

The Central Bank of the Republic of Turkey (CBRT) announced new macroprudential measures.

In the statement made by the CBRT, in the Monetary Policy and Liraization Strategy for 2023, the policies implemented to permanently increase the weight of the Turkish lira on both the asset and liability sides of the banking system will be strengthened and continued to be used, policies that support the effectiveness of the monetary transmission mechanism will be maintained, and a supportive policy in terms of permanent price stability will be maintained. It was reminded that the issues that financial stability, which is an important factor, will continue to be observed, and that policies for using foreign currency deposits to maximum extent for foreign currency loan funding will be implemented, were shared with the public before.

In the statement, it was pointed out that the required reserve and general liquidity applications, which are based on the on-balance sheet or off-balance sheet items of banks and other financial institutions, are among the main duties of the Central Bank specified in Article 4 of the Central Bank Law No. 1211. It was announced that it was strengthened and continued according to the liraization strategy.

In this context, the following information was given regarding the changes made in securities and required reserve practices:

“Besides banks, other financial institutions have also been included in the scope of securities regulation, and in the first stage, factoring companies have been obliged to establish securities based on the interest rate they apply to factoring receivables in Turkish lira. The duration of banks’ securities establishment practices according to loan interest rate and loan growth rate is 29 December. It has been extended until 2023. The scope of the assets and liabilities of banks that are subject to security establishment has been expanded. On the liabilities side, funds obtained from foreign currency repo transactions made with domestic real persons and real sector are subject to securities establishment by making financial derivative transactions with customers providing foreign currency funds. Transactions carried out for the purpose of removing foreign currency liabilities from the balance sheet will be subject to the establishment of securities issued by the real sector on the Assets side and whose qualifications are determined by our bank.

Considering the decline in the FX funding items of foreign currency loans, a security facility application was introduced to support the balanced development of foreign currency loans. The possibilities of establishing Turkish lira required reserves in gold were terminated as of 23 June 2023. The said regulations have been published in the Official Gazette, and their details will be shared with banks and factoring companies with implementation instructions.

It is made available to the public.”