While markets are fluctuating with concerns over global growth based on China and uncertainties about a rate hike by the U.S. Federal Reserve (Fed), the Central Bank of Turkey made three significant moves on Saturday. The bank decreased intermediation costs for banks, increased the cap on carrying out transactions with foreign currency and made a change to required reserves to encourage long-term borrowing. The central bank increased the cap on foreign exchange transactions with Turkish banks by 130 percent to $50 billion to support foreign currency liquidity. Analysts said that banks do not use this method frequently and the central bank took this step to indicate it would step in in case of an extraordinary shrinking of finance.

The central bank changed the required lira reserve ratios for non-deposit/non-participation fund foreign currency liabilities to encourage long-term borrowing that is longer than three years with the purpose of helping support core financial obligations. The bank also said that it would raise interest rates paid on required lira reserves by 1.5 percentage points in three installments on Sept. 1, Oct. 1 and Dec. 1 to reduce bank expenses.Analysts emphasized that higher interest payments on lira reserve requirements would cut intermediation costs and support core liabilities. They also added that the measure is in accordance with a roadmap revealed on Aug. 18 to simplify Turkey's monetary stance.