The Central Bank of the Republic of Türkiye (CBRT), led by newly appointed Governor Hafize Gaye Erkan, has initiated its first move toward streamlining policies promoting savings in the Turkish lira. This involves easing the security maintenance rule.
The fresh steps are in line with the bank’s goals to increase the functionality of market mechanisms after it hiked rates to 15% from 8.5% this week.
Türkiye’s securities maintenance regulation has been simplified to increase the functionality of market mechanisms and strengthen macro-financial stability, the bank said on Sunday.
In a statement, it said the decision was part of policies announced after the recent monetary policy committee meeting on Thursday, and the simplification process would continue in a gradual manner.
In a statement after the committee meeting, the bank said it would simplify and improve the existing micro-and macro-prudential framework to increase the functionality of market mechanisms and strengthen macro-financial stability.
According to an announcement in the country's Official Gazette, the securities maintenance ratio that Turkish banks are required to allocate to their foreign currency deposit has been reduced to 5% from 10%.
With the new regulation, banks must maintain securities ranging between 3% and 12% of their lira deposits. It was between 3% and 17% previously.
The new regulation also said banks whose lira deposits are less than 57% of total deposits will have to hold an additional seven percentage points of securities.
Previously the requirement of seven additional points
applied to banks that held less than 60% lira deposits.
The easing comes after the newly-appointed Treasury and Finance Minister Mehmet Şimşek promised a return to “rational” policies.
At Erkan’s first monetary policy meeting last week, the central bank hiked the interest rate by 650 base points to 15% and signaled a “gradual tightening.”
Erkan met bankers on Friday, and in her first public appearance since taking the role said they had requested a simplification of rules.
