Required reserves for KKM hiked to 25 percent

ANKARA

The required reserves for FX-protected lira deposit accounts, also known as KKM, with maturities of up to six-months, have been increased from 15 percent to 25 percent.

The Central Bank’s respective decision was published in the Official Gazette.

The required reserves for KKM deposits with maturities of one year and more was set at 5 percent.

The bank last month started to roll back the KKM scheme. The bank announced on Aug. 20 that it decided to end the implementation which stipulates a target for conversion from foreign currency deposits to FX-protected deposits.

This was part of the simplification process, the bank said in a statement.

“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,” it explained, adding that the objective is to contribute to strengthening macro financial stability by supporting Turkish lira time deposits.

The simplification process and the steps regarding the transition from FX-protected deposits to Turkish lira deposits will continue, it said.

The data from the Banking Regulation and Supervision Agency (BBDK) showed that KKM held with local banks continued to decline for a second week in a row.

KKM deposits, which stood at 3.4 trillion liras on Aug. 18, fell from 3.37 trillion liras on Aug. 25 to 3.35 trillion liras as of Sept. 1, while deposits collected by local lenders climbed from 12.89 trillion liras to 12.94 trillion liras over the same period.