The Central Bank increased the securities establishment rate from 5 percent to 10 percent within the scope of its liraization strategy. With the 2023 liraization strategy, the CBRT, which has increased its target of liraization in deposits from 50 percent to 60 percent in the first half of the year, will apply a discount or increase to banks with its latest macroprudential measure. With the regulation, it is stated that the securities establishment rate will be applied at a discount to the banks whose TL shares exceed the 60 percent target, while this rate will be increased for the banks that cannot reach the target.
While the historical losses in the Turkish Lira continue with the decisions taken by the economy management, the Central Bank of the Republic of Turkey (CBRT) adds new macroprudential measures every day. The Central Bank announced its liraization strategy for 2023. In the first half of the new year, it increased its target to become lira in deposits from 50 percent to 60 percent. The CBRT, which has increased its liraization target, has increased the securities establishment rate of banks from 5 percent to 10 percent, within the scope of the liraization strategist, with the latest macroprudential measure it has published. In the statement made by the CBRT, it was stated that as a result of the Liraization Strategy, the banks in general reached the target of 50 percent in deposits, which was announced in 2022. In the statement, it was stated that the rate of establishment of securities has increased from 5 percent to 10 percent, and that the rate of establishment of securities will be applied at a discount to banks that exceed the 60 percent target in Turkish Lira shares for real persons and legal entities. In the statement, it was stated that “the lower of the aforementioned rate will be reduced by 5 points for banks with a ratio between 60 and 70 percent, and by 7 points for banks with a higher than 70 percent security establishment rate”. For banks whose TL shares are below the 60% target, it was stated that the previously determined additional rates will be added to the security establishment rate and will continue to be applied. It has been announced that the application in question will be effective from February 24. Economists, who evaluated the regulation made, underlined that the situation is not sustainable. Commenting on the CBRT’s decision on his social media account, ZiraatBank’s former Deputy General Manager, Prof. Dr. Şenol Babuşcu, ”The new Central Bank decision with Incremental-Discount. Don’t bother like that. Say that the use of foreign currency is prohibited. Let’s move to the closed economy, all the problems will end,” he said.
‘KKM EXIT PANIC’
Evaluating the Central Bank’s decision, financial markets expert İris Cibre said, “The rate of establishing securities for foreign currency deposits in banks was increased from 5 percent to 10 percent. If TL deposits between 60-70 percent are reached, 5 points, 70 percent and 7 points of discount, if 50 percent, 7 points increase, if 60 percent, 2 points. Off-balance sheet transactions are included in the securities establishment. If it is calculated incompletely, he used the expressions of “3 times the dollar deposit blocked”. Cibre stated that the exit at KKM panicked the Center and said, “The exit of KKM panicked. A new regulation will come soon,” he said. According to the Banking Regulation and Supervision Agency (BDDK) data, as of the week of December 30, the size of KKM decreased by 47.9 billion TL to 1.42 trillion TL.
TREASURY GAVE 108.3 BILLION IN 2022
Treasury cash balance posted a deficit of 108.3 billion TL in December. Thus, 2022 was completed with a deficit of 169.4 billion TL. Treasury cash balance showed a deficit of 108.3 billion liras in December 2022 and 169.4 billion liras in the whole of 2022. Treasury cash balance had a deficit of 99.5 billion liras in November 2022. While the primary balance gave a deficit of 92.8 billion TL in December, a surplus of 110.6 billion TL was observed in the primary balance throughout 2022. Interest payments in the whole of 2022 amounted to TL 287.2 billion. Net borrowing in 2022 was recorded as 437.3 billion TL. Net foreign borrowing was 75.2 billion TL, while net domestic borrowing was 362.1 billion TL.
AFTER REGULATIONS, 10-YEAR BOND RETURN HAS BOUGHT
The arrangements made by the Central Bank in security establishment and required reserve ratios in the last days of the year caused a bottom to be seen in 10-year bond yields. Turkey’s 10-year bond yields declined after the Central Bank of the Republic of Turkey (CBRT) took steps to increase the weight of lira assets in the financial system. Yields on 10-year government bonds fell 131 basis points to 8.52 percent, the lowest level since April 2015, after experiencing the largest annual decline to record 1,449 basis points in 2022.
‘LET’S GO TO THE CLOSED ECONOMY AND ALL PROBLEMS END’
Economists, who evaluated the regulation made, underlined that the situation is not sustainable. Commenting on the CBRT’s decision on his social media account, ZiraatBank’s former Deputy General Manager, Prof. Dr. Şenol Babuşcu, ”The new Central Bank decision with Incremental-Discount. Don’t bother like that. Say that the use of foreign currency is prohibited. Let’s move to the closed economy, all the problems will end,” he said. Academic and economist Firuze Nazlı Ergin said, “Banks hold securities at the rate determined at the Central Bank. This ratio was increased from 5 percent to 10 percent. Discounts will be applied to banks with a “Liraization” rate of 60 percent or more. As long as the insistence on the current monetary policy continues, such communiqués will continue to increase helplessly,” he commented.
‘THE BEST PROBABILITY CAN GROW AN UNBALANCED INFLATIONIST’
Evaluating the Central Bank’s decision to increase the security establishment rate from 5 percent to 10 percent from her social media account, economist Hatice Özütler said, “The obligations of banks to carry securities based on liraization: 10+7 percent if less than 50 percent, 50 percent- If it is 60, it is 10+2 percent, 60-70 percent is 5 percent, if it is 70+ percent 3. 250 billion liras after the KGF package, at best, with the suppressed export revenues, “unbalanced+inflationary” growth can be achieved and this is not liraization.