Turkey’s central bank and one of the country’s top business associations, including its representatives from abroad, discussed on Friday the recently unveiled scheme to encourage expats to repatriate their savings to Turkey.
Central Bank of the Republic of Turkey (CBRT) Governor Şahap Kavcıoğlu met virtually with Mahmut Asmalı, the chairperson of the Independent Industrialists and Businesspersons Association (MÜSIAD), and the nongovernmental organization (NGO) representatives in foreign countries.
The meeting came within the framework of the CBRT’s meetings to introduce the “Deposit and Participation Scheme for NonResident Turkish Citizens” accounts to be held in domestic banks.
The scheme, known as YUVAM in short, was announced earlier this week and came amid efforts to safeguard Turkish lira savings against exchange rate volatility.
It is part of a scheme unveiled by President Recep Tayyip Erdoğan last month to encourage foreign currency holders to convert their funds to lira and keep their savings in Turkish money.
The initiative was unveiled after the lira fell to a record low of 18.4 to the United States dollar on Dec. 20 before rallying sharply to just over 10 and then settling at current levels just under 14 to the U.S. currency.
Erdoğan maintains that the lira deposit system, which compensates depositors for any losses due to lira depreciation, is a success.
The facility has attracted around TL 290 billion ($21 billion) so far, Mehmet Ali Akben, the head of the Banking Regulation and Supervision Agency (BDDK), said Thursday.
Since the announcement, the government extended the program to corporate accounts. The CBRT also said exporters would be required to exchange 25% of their foreign currency revenue into lira.
The central bank said the latest scheme aims to encourage Turkish citizens living abroad to repatriate their funds to Turkey to establish a savings framework allowing them to protect the value of their savings and leverage the contributions of such savings to the country’s economic development and balance of payments.
The expats will be able to convert their foreign currency accounts into special lira accounts with returns linked to the value of the foreign currency.
The expats can benefit from this incentive if they transfer foreign exchange funds that they keep at banks abroad to foreign exchange deposit or participation accounts in dollars, euros and pounds in domestic banks and convert them to YUVAM accounts in the lira.
YUVAM accounts can have maturities of three, six, 12 and 24 months.
The central bank says while protecting the YUVAM account holders from the exchange rate volatility, it may provide additional returns varying by maturities.
The interest/profit share that will be accrued to YUVAM accounts by domestic banks will be compared to the sum of the change in exchange rates at the end of the maturity and the additional returns that the bank will pay, and the higher amount will be paid to the deposit or participation account holder.
In case of money withdrawal from the account before maturity, the account holder will not be able to benefit from the incentive.