Central Bank Changes Required Reserve Ratios

The Central Bank of the Republic of Turkey (CBRT) has announced a change in required reserve ratios in an effort to support the monetary transmission mechanism and the ongoing simplification process. The decision, which was published in the Official Gazette, aims to address volatilities in loan supply and deposit interest while supporting the monetary tightening process.

According to the CBRT decision, the required reserve ratios for exchange rate protected accounts will be reduced from 30 percent to 25 percent for maturities up to 6 months. Additionally, the additional required reserve ratio in Turkish lira for foreign currency deposit/participation fund accounts will be increased from 4 percent to 8 percent.

These changes are intended to strengthen the steps towards the transition to Turkish lira deposits, while continuing the quantitative tightening process. The CBRT’s decision reflects its commitment to supporting the monetary transmission mechanism and maintaining macroprudential decisions amid market volatilities.

The decision, which was made in the Monetary Policy Committee meeting dated January 25, 2024, underscores the CBRT’s efforts to navigate the complexities of the current economic climate while promoting stability and sustainability. As the CBRT continues to implement measures to address market volatilities and support the monetary tightening process, it remains focused on facilitating a smooth transition towards Turkish lira deposits.

 

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