Turkey revises bank reserve requirements to control loan growth

0

Commercial loans that have been extended in four-week periods since April 1 will be subject to a 10% reserve requirement, the central bank said in a statement on Saturday.

It also increased the reserve requirements for personal accounts with lenders that failed to meet the target of converting accounts denominated in foreign currencies into liras. The monetary authority raised the ratio of foreign currency deposits by 500 basis points for banks with a conversion rate below 5% and by 300 basis points for those with a rate between 5% and 10%.

The changes will take effect from the calculation date of May 27, with the maintenance period starting on June 10, it said.

The revision to reserve requirements came after the central bank kept its benchmark rate at 14% for a fourth consecutive month despite inflation above 60%.

The Monetary Policy Committee said in its April rate decision text that it was weighing the prospect of growth in long-term investment lending against the need to control the current account. “In this context, the committee decided to strengthen the set of macroprudential policies,” the bank said, noting a possible change in reserve requirements.

The country’s gross reserves excluding gold holdings stood at about $69 billion in the week ending April 15, down about 5% from the end of 2021.

Share.

About Author

Comments are closed.