CBRT extends duration of support for earthquake-hit region

The Central Bank of the Republic of Turkey stated that the CBRT is simplifying the existing micro and macroprudential framework in a way that will increase the functionality of market mechanisms and strengthen macro-financial stability.

In this context, it was stated that the securities maintenance ratio applied at 5 percent for foreign currency liabilities will be reduced to 4 percent, and that the temporary practice regarding securities maintenance based on credit growth, which was set to end on December 29, 2023, will be extended for a period of 6 months.

It was also noted that steps to support Turkish lira deposits will continue to be taken within the scope of policies regarding the prioritization of Turkish lira deposits.

Central Bank continues to take steps toward simplification

The information note sent by the Bank also pointed out that the CBRT has taken significant steps within the scope of simplifying macroprudential measures.

In this framework, it was reported that the securities maintenance ratio for foreign currency deposits has been reduced from 5 percent to 4 percent in order to increase the effectiveness of the monetary transmission mechanism and strengthen macro-financial stability.

It was stated that the monthly TL loan growth limits within the scope of selective credit and quantitative tightening decisions, which support the monetary tightening process, will continue to be applied in the same manner until June 2024, and that currently, the monthly TL loan growth limits are applied at 2 percent for vehicle loans, 2.5 percent for commercial loans, and 3 percent for consumer loans.

Recalling that in its previous decisions, the CBRT had decided to set the monthly growth limit for TL commercial loans at 2.5 percent, down from 3 percent, as a complement to steps supporting the tightening process, it was noted that loans provided for exports, investments, agriculture, tradesmen, and the earthquake-hit region were kept exempt from these limitations.

It was stated that the Bank has extended the securities maintenance exemption granted to loans extended to the earthquake-hit region for 6 months until June 2024, in order to support the recovery process in the region.

It was also stated that the 75 percent renewal target within the scope of the commission practice applied over required reserves established for foreign currency deposits has been terminated, and that the monthly TL share increase target has been revised to be differentiated according to the Turkish lira deposit share as part of the steps taken to strengthen the monetary transmission mechanism.