15 percent mandatory reserve requirement for KKM

According to the decision published in the Official Gazette, the required reserve ratio for currency protected deposit accounts has become 15 percent for all maturities. The selective credit and quantitative tightening steps emphasized in yesterday’s decision of the Central Bank of the Republic of Turkey (CBRT) Monetary Policy Committee (PPK) have begun. In this context, the Communiqué on Amendments to the Communiqué on Required Reserves was published in the Official Gazette. According to the Communiqué, the required reserve ratio for currency protected deposit accounts has become 15 percent. Approximately 450 billion TL of liquidity will be withdrawn from the system with the regulation. Sources speaking to Bloomberg HT yesterday had reported that an increase in required reserves in currency protected deposits was planned. Recently, both the increase in currency protected deposit interest rates and the excess liquidity in the market due to the increase in exchange rates posed a risk of reducing the effectiveness of monetary policy. The Central Bank will tighten liquidity with the required reserve policy in order to eliminate this effect.