Money parked in KKM accounts continues to decline

ANKARA

The decline in the FX-protected deposit accounts, also known as KKM, has continued for a fourth week in a row, data from the Banking Regulation and Supervision Agency (BDDK) have shown.

KKM accounts, which ballooned to 3.4 trillion Turkish Liras on Aug. 18 dropped to 3.3 trillion liras as of Sept. 15.

The decline in those accounts amounted to more than 100 billion liras over a one-month period.

The Central Bank started to roll back the KKM scheme, which was introduced in late 2021 to protect the value of the local currency, in August, eliminating the previous targets for levels of conversions of foreign-exchange deposits to KKM.

The regulations are intended to increase Turkish lira deposits while decreasing FX-protected deposits by ensuring transition from FX-protected accounts to Turkish lira deposits, the bank said on Aug. 20.

After the bank announced measures to roll back the scheme, the money parked in KKM accounts dropped from their height of 3.4 trillion liras to 3.37 trillion liras in the week ending Aug. 25.

The decline in the KKM accounts continued steadily in the following weeks.

Earlier this month, the Central Bank announced more steps to bolster the Turkish lira deposits in the financial system.

According to the instruction sent to local lenders, the targeted monthly rise in the share of lira deposits in total deposits has been raised from 2 percent to 2.5 percent.