No sudden exit from FX-protected deposit scheme: VP Yılmaz

ANKARA

There will be no sudden exit from the FX-protected deposit account scheme, Vice President Cevdet Yılmaz has said.

The scheme was a necessity when it was first introduced and has accomplished its task, Yılmaz told a group of journalists, noting that the amount of money in the FX-protected accounts has been declining fast.

The scheme was never conceived as a permanent measure, Yılmaz added. “It continues to operate under different framework now. We do not consider ending it suddenly.”

If the scheme had not been introduced the cost from the “currency shock,” which might have occurred at that time, could have far exceeded the cost of the scheme itself, Yılmaz said.

“It has served the purpose. We are now exiting it gradually…And we are doing this without causing financial instability or problems in the exchange rate markets.” the Vice President added.

In the longer run, it may still remain as an instrument within the financial system on a smaller scale which does not pose risks, he furthered.

“It can always be an instrument which the financial system uses, for which the public does not assume any liability.”

The FX-protected deposit scheme was launched in December 2021. The Central Bank began rolling it back in August this year.

According to data from the Banking Regulation and Supervision Agency (BDDK), FX-protected deposit accounts reached 3.4 trillion Turkish Liras in mid-August but have been declining since then.

FX-protected deposits accounts fell to 2.77 trillion liras as of Nov. 17.