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The required reserves were regulated, which is one of the steps that the market hopes to take in the normalization process.
The Central Bank of the Republic of Turkey (CBRT) has made changes to the mandatory reserve ratios. However, the loan growth requirement for the application of the required reserves was eliminated.
According to the Notice of Amendment to the Notice on Required Reserves published in the Official Gazette: The required reserves in Turkish liras increased from 4 percent to 6 percent for demand deposits / participation funds with maturities of up to 1 month and up to 3 months.
Required reserves in Turkish liras increased from 4 to 6 percent for borrowers’ funds and other liabilities for up to one year.
The required foreign currency reserves increased from 17 percent to 19 percent for demand deposits up to 1 month, up to 3 months, 6 months and up to 1 year of time deposits / participation funds. Required foreign currency reserves were reduced from 17% to 19% for borrower funds.
Interest / interest paid on required reserves will be 12 percent for the entire sector.
With a separate announcement, the CBRT also regulated the interest rates paid for required reserves. Consequently, the interest rate paid for the required reserves in Turkish lira will be applied at 12 per cent for the entire sector.
The commission rate applied to the required reserves established for the liabilities of the deposit / participation funds in US dollars was determined as 0% as 1.25%.
CBRT: it was decided to switch to a simple mandatory reservation system
In the CBRT statement on regulation, it was indicated that the decision was made to switch to a simpler reserve system.
With these changes made according to the statement, if the rates of use of reservation options remain at the same level, the required reservation facilities of the system are expected to increase by approximately 12.3 billion Turkish liras and 5.7 billion. dollars in foreign currency and gold.
The bank indicated in the statement that brokerage costs would be reduced as a result of changes in interest / interest rates and fees.
Changes in interest / interest rates and fees, from the establishment date of November 27, 2020; Changes to the required reserve ratios in Turkish lira and foreign currency will take effect from the liability period on December 11, 2020, which will start on December 25, 2020.
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