Central Bank takes action on reserve requirements

The Central Bank of the Republic of Türkiye (TCMB) Monetary Policy Committee (PPK) has kept the policy rate unchanged at 50 percent for the second consecutive time.

Following the interest rate decision, the TCMB took steps to support Turkish Lira (TL) deposits, accelerate the decline in FX-protected deposits (KKM), and limit the growth of foreign currency loans.

In an announcement made by the TCMB, it was stated that reserve requirement ratios applied to TL deposits and KKM accounts have been increased in order to maintain macro-financial stability, support the monetary transmission mechanism, and sterilize excess liquidity.

The reserve requirement ratios applied to TL deposits and KKM accounts have been determined as follows:

Previous Ratio New Ratio

Short-term TL deposits 8 percent 12 percent

Long-term TL deposits 0 percent 8 percent

Short-term KKM 25 percent 33 percent

Long-term KKM 10 percent 22 percent

The announcement stated that the reserve requirements will be established tomorrow.

It was also noted that the target regarding the transition of KKM to TL is maintained in reserve requirement interest and commission practices, and the total target, including renewals, has been reduced to 75 percent.

The announcement stated that corporate KKM accounts as well as individual and corporate YUVAM accounts will be excluded from the total target calculation effective from the next calculation period, and that if the total target is met, the interest rate applied to reserve requirements established for KKM will be reduced to 40 percent of the policy interest rate.

MONTHLY 2 PERCENT GROWTH LIMIT IMPOSED ON FOREIGN CURRENCY LOANS

In the announcement, which stated that a monthly 2 percent growth limit has been imposed on foreign currency loans, it was noted that it has been decided to establish a reserve requirement in TL equal to the loan amount exceeding the limit, to be held as a blocked deposit for one year.

The announcement stated, "The decision regarding reserve requirement ratios will be published in the Official Gazette, and implementation instructions regarding other decisions will be conveyed to banks."