Turkish central financial institution introduced on Monday that it determined to restrict maturity intervals for overseas currency-protected deposit accounts as a part of its exit technique from the scheme.
In a press release, the central financial institution mentioned it determined to terminate account openings and renewals with six and 12-month phrases for currency-protected accounts transformed from foreign currency and gold.
“As part of the strategy to phase out FX-protected deposit accounts (KKM accounts), longer-term maturities for new and renewed accounts have been discontinued,” the Central Bank of the Republic of Türkiye (CBRT) mentioned in a press release.
“The Central Bank of the Republic of Türkiye has decided to terminate the opening and renewal of FX-protected deposit and participation accounts -converted from FX and gold- with maturities of six months and 12 months as of Jan. 20, 2025,” it added.
The financial institution introduced earlier that it deliberate to terminate the so-called KKM scheme this 12 months because it continues to simplify the macroprudential framework.
“As the disinflation process becomes more evident in 2025, demand for Turkish lira assets will continue. In view of the rise in the ratio of Turkish lira deposits and the fall in KKM accounts, the CBRT will continue to simplify the macroprudential framework and terminate the KKM scheme in 2025,” the CBRT mentioned late in December, asserting its coverage street map for 2025.
The quantity of FX-protected accounts has steadily declined for over 70 weeks, as authorities introduced in the summertime of 2023 the plans to cut back the scheme.
Under the scheme, adopted in late 2021 to assist reverse dollarization and counter a steep fall in lira, the central financial institution has been defending deposits by protecting depreciation prices.
However, amid the shift to extra standard macroeconomic insurance policies, the authorities started with steps to steadily exit from the scheme, which additionally weighed closely on the price range.
The share of the Turkish lira in whole deposits, in the meantime, continued to extend and stands at 58.7% as of Jan. 3, in line with the central financial institution information.
Source: www.dailysabah.com