Turkey's Central Bank revises reserve requirements

ANKARA

Turkey's Central Bank on July 1 revised its regulations on reserve requirements “to improve the effectiveness of the monetary transmission mechanism.”

The bank decreased Turkish lira reserve requirement ratios by 200 basis points- for all maturity brackets.

“The upper limit of the facility for holding FX [foreign exchange] will be decreased from 20% to 10% of Turkish lira reserve requirements. The facility will be terminated on 1 October 2021,” read a statement.

With this decision, the bank said it expects that Turkish lira and FX denominated required reserves will increase by approximately 13.2 billion Turkish liras and $2.7 billion, respectively.

“Additional remuneration rate will be applied to Turkish lira denominated required reserves to increase the share of Turkish lira in the total deposit/participation funds in the banking system,” the statement said.

“These changes will be effective from the calculation date of 19 July 2021 with the maintenance period starting on 6 August 2021.”