ALBAWABA – The Turkey Central Bank lowered the securities maintenance ratio to 5 percent Sunday, from 10 percent, effective immediately, according to the Official Gazette.
The maintenance ratio was raised twice since 2021 to bolster the lira, from 3 percent.
Raising the maintenance ratio boosts the conversion of foreign currency deposits to national currency deposits, in the Turkish Lira. It is part of President Recep Tayyip Erdogan’s “Lirazation Strategy”, Bloomberg explained.
This is the first step to simplifying policies under new central bank Governor Hafize Gaye Erkan.
Accordingly, if the Turkish banks’ share of lira deposits to total deposits falls below 5 percent, they will need to increase the securities maintenance ratio by an additional 7 percentage points. The previous threshold was 60 percent.
Additionally, banks will get a discounted securities maintenance ratio of they increase their share of lira deposits to above 70 percent
The easing comes after Turkey’s Treasury and Finance Minister Mehmet Simsek promised a return to “rational” policies, according to Bloomberg.
At Erkan’s first monetary policy meeting last week, the central bank hiked the interest rate by 650 base points to 15 percent, as the governor signaled “gradual tightening.”
Erkan met bankers Friday, and during her first-ever public appearance she stated that they had requested a simplification of rules.
The securities maintenance regulation was simplified to increase the functionality of market mechanisms and strengthen macro-financial stability, the central bank said in a statement. The statement was published right after the publication of the Official Gazette.
