The Central Bank of the Republic of Turkey (CBRT) decreased the Turkish lira reserve requirement ratios on Tuesday in order to support the country's financial system.
According to a CBRT statement, "The Turkish lira reserve requirement ratios have been decreased by 50 basis points for all maturity brackets."
"In the context of the Reserve Options Mechanism, the coefficients for the second, third and fourth tranches of the FX facility and for the first two tranches of the gold facility have been increased by 0.1 [base point]."
Now banks will be required to keep 11 percent of their lira liabilities of up to a year's maturity on hand to cover for potential losses, a decrease from 11.5 percent. The decrease in lira reserve requirement ratios will add over $1 billion liquidity to the Turkish financial system, the bank said. "Should the reserve option utilization rates remain unchanged, approximately 1.1 billion Turkish liras ($330 million) and $600 million of liquidity would be provided to the financial system with these changes," it added.