Following the attention-grabbing interest rate decision made on Thursday, the Central Bank of the Republic of Turkey made a second move.
The Central Bank, which raised the policy rate from 8.5% to 15%, took a loosening approach in the securities custody regulation applied to banks.
In the written statement issued by the bank, it was stated that “The obligation for banks regarding the TL (Turkish Lira) weight in their balance sheets was reduced from 60% to 57%. The securities custody rate for banks unable to fulfill this obligation was lowered from 10% to 5%. The Central Bank of Turkey announced that the simplification process will continue ‘gradually’.”
While maintaining the “70% TL (Turkish Lira)” target in the liraization process, the securities custody burden was reduced for banks that failed to meet the target. The obligation for banks regarding the TL weight in their balance sheets was lowered from 60% to 57%. The securities custody rate, which was initially 10%, was also reduced to 5%.
In the new period, markets were expecting not only interest rate hikes but also relaxation in regulations. The first step has now been taken with the securities custody regulation.
The Central Bank emphasized a “gradual” approach for the simplification policy following the interest rate hike.
It is believed that the decision could have a positive impact on banking shares while potentially putting pressure on the exchange rate.