Turkish Central Bank revises reserve requirements

The Central Bank of the Republic of Turkey (CBRT) on Nov. 27 revised its regulations on reserve requirements to improve the effectiveness of the monetary transmission mechanism in the country.

In line with its main objective of price stability through monetary tightening, the bank decided to simplify its reserve requirement regulations, it underlined in a written statement.

The CBRT said it had thus decided to apply the same reserve requirement ratios and remuneration rates to all banks, while also overturning the earlier practice of linking reserve requirement ratios and remuneration rates to real loan growth rates.

With the decision, the remuneration rate for all banks' Turkish lira-denominated required reserves will be 12%.

It also decreased the commission rate applied to reserve requirements maintained against US dollar-denominated deposit/participation fund liabilities to 0% from 1.25%.

The bank also changed reserve requirement ratios for Turkish lira and foreign exchange (FX) deposits.

On the Turkish lira side, it raised reserve requirement rates to 6% - from the previous 4% - for demand and one to three-month notice deposits.

For notice deposits of up to six months, reserve requirements will be at 4%, while they will be at 2% for notice deposits of up to a year and 1% for those over one year.

For borrower funds of investment banks, the rate will be 6% - up from 4% - for notice deposits of up to a year, 3.5%, 1% for those up to three years and 1% for those longer than three years.

Meanwhile, the reserve requirement rate will be 19% for demand and one to six-month notice FX deposits and 13% for such deposits with notice intervals longer than one year.

Precious metal deposits...