Central Bank unveils steps to increase Turkish Lira deposits

The Central Bank has ended targeting conversion from foreign currency deposits to FX-protected Turkish Lira deposits (KKM) in a bid to support the lira time deposits.

The volume of deposits collected under the FX-protected accounts reached 3.36 trillion liras ($124 billion) as of Aug. 11, rising by 75.3 billion liras from a week ago, according to the latest data from the Banking Regulation and Supervision Agency (BDDK).

At the start of the year, depositors held 1.4 trillion liras in FX-protected accounts, rising steadily to surpass the 2 trillion liras-mark in late April.

Budget payments into KKM amounted to 34.5 billion liras in July with total payments reaching 59.5 billion liras in the first seven months of 2023.

"As part of the simplification process, it has been decided to end the implementation that stipulates a target for conversion from foreign currency deposits to FX-protected deposits as well as the securities maintenance and reserve requirement practice based on the Turkish lira share," the Central Bank said in a statement on Aug. 20.

The regulations are intended to increase the Turkish lira deposits while decreasing FX-protected deposits by ensuring transition from FX-protected accounts to lira deposits, it added.

"The objective is to contribute to strengthening macro financial stability by supporting Turkish lira time deposits."

The simplification process and the steps regarding the transition from FX-protected deposits to Turkish lira deposits will continue in line with the principles announced by the Monetary Policy Committee (MPC), the bank said.

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