Central Bank takes more simplification steps
ANKARA
Türkiye’s Central Bank has announced additional steps under its plan to continue to simplify and improve the existing micro- and macroprudential framework.
The bank on Oct. 26 delivered a 500 basis points hike in its policy rate, the one-week repo auction rate, from 30 percent to 35 percent. The rate hike, which was the fifth time in a row, was in line with economists’ expectations.
The simplification process is advancing gradually, and the monetary transmission mechanism will be further strengthened by taking additional steps to increase the share of Turkish lira deposits, the bank recalled in a statement issued on Oct. 26.
As part of the steps under the simplification process, the securities maintenance practice applied to banks at a rate of 30 percent based on the Turkish Lira-denominated cash loans they extend is terminated, said the bank.
The securities maintenance practice applied at a rate of 30 percent on securities issued by the real sector and purchased by banks is also terminated.
The securities maintenance practice that banks are subject to for Turkish lira commercial loans based on the interest rate/dividend rate that banks apply above 1.8 times the reference rate will be abolished.
Access to export loans will be facilitated by exempting imports of investment goods from the net exporter requirement.
Changes will be made to the practice of charging commissions on reserve requirements for FX deposits in order to increase the share of Turkish lira through the renewal of FX-protected accounts -converted from FX accounts- and their conversion to lira, the bank also said.
“The target rise for the share of real persons’ lira deposits, which was set at 2.5 percent, will be increased to 3.5 percent,” it added.