Central Bank of the Republic of Türkiye (CBRT) Governor Fatih Karahan answered questions from members of parliament following his presentation at the TBMM Planning and Budget Committee. In his assessment regarding the recent liquidation process of certain investment funds, Karahan said they are closely monitoring developments in terms of financial stability.
Karahan stated that repo auction amounts have been increased to facilitate banks' access to liquidity, and that banks' borrowing limits have been increased tenfold. Noting that the discount rates for CPI-indexed securities and foreign currency-denominated collateral used as collateral have been reduced to 10 percent, Karahan also stated that there has been a reduction in the rates that must be held as blocked in Turkish Lira required reserves.
EMPHASIS ON MEASURES AGAINST CONTAGION RISK
Stating that their priority is to prevent problems seen in the past from spreading to the financial system as a whole, Karahan said that a healthy functioning has been maintained across the fund market following the steps taken. Karahan expressed that, in light of current data, they do not see a problem affecting the financial system as a whole.
Making assessments regarding preferences for the Turkish Lira, Karahan stated that the TL share is moving horizontally and is consistent with the outlook prior to September. Karahan stated that developments in the funds have not led to a significant shift toward foreign currency or gold.
Karahan said, "The foundations of our financial system are quite solid. Our institutions are working in high coordination. As the Central Bank, we will resolutely maintain our stance supporting financial stability without compromising our price stability target."
Stating that the links between the funds in the liquidation process and the rest of the financial system are decisive in terms of contagion risk, Karahan noted that this connection appears weak. Karahan assessed, "We can say, at least in light of current data, that confidence in the Turkish Lira continues strongly."
Stating that despite recent fluctuations in domestic financial markets, they have observed a limited increase in domestic-sourced foreign currency demand, Karahan said that the tight monetary policy stance will limit possible negative effects on financial stability.
Karahan also responded to a question regarding banks transferred to the SDIF. Stating that the share of the banks in question within the total sector is quite low, Karahan noted that their connections with the rest of the banking system are limited and that they do not expect this development to create systemic risk in the current situation.
News Source: 12punto
