By Pradeep Saran, September 18, 2023
Turkey’s Central Bank has introduced new measures to strengthen the presence of Turkish Lira deposits within the country’s financial system. Last month, the bank initiated the rollback of the FX-protected deposit accounts scheme, discontinuing the previous requirement that mandated the conversion of foreign currency deposits into FX-protected deposits.
On September 18th, the Central Bank unveiled additional measures aimed at increasing the proportion of Turkish Lira deposits. In accordance with the directives issued to local banks, the monthly target for the growth of Lira deposits as a percentage of total deposits has been adjusted upwards, from 2 percent to 2.5 percent.
Recent data from the Banking Regulation and Supervision Agency (BDDK) revealed a continued decline in FX-protected deposit accounts. The volume of FX deposit accounts decreased from 3.35 trillion Turkish Liras in the week ending September 1st to 3.33 trillion Turkish Liras as of September 8th. In contrast, total deposits with local banks expanded from over 12.9 trillion Turkish Liras to more than 13 trillion Turkish Liras during this period.
The Central Bank had previously explained in an August statement that the measures related to FX-protected deposit accounts were part of a simplification process. The bank stated, “The regulations are intended to boost Turkish Lira deposits while reducing FX-protected deposits by facilitating the transition from FX-protected accounts to Turkish Lira deposits.
“Furthermore, on September 18th, the Central Bank raised the invoice exemption threshold for export and SME (small- and medium-sized company) loans from the previous 50,000 Turkish Liras to 250,000 Turkish Liras (approximately $9,300). This adjustment aims to facilitate the flow of credit in the economy.