Apr 1, 2023
Turkey Eases Rules for Key Lira Savings Tool As Election Nears
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Turkey’s central bank will be able to allow banks to issue shorter maturities for foreign-exchange-protected lira deposit accounts if there is demand, according to a decree published in the Official Gazette on Saturday.
The maturities of FX-protected lira deposit accounts will be determined by the central bank. The change allows the bank to remove the minimum maturity of three months that was in place previously.
There is no immediate change in the maturities and the change does not apply to deposits converted from regular lira deposits paid by the Treasury.
Turkey Increases Pressure on Banks Over Key Lira Savings Tool
This is the third change the Central Bank has made to FX-protected lira deposit accounts accounts this week. On March 30, the central bank allowed companies with FX liabilities to open FX-protected lira deposit accounts with 1-month maturity. On Friday, banks were allowed to set interest rates freely for FX-protected lira deposit accounts. Previously, banks were only allowed to offer central bank policy rate+3 percentage points interest rate for such accounts.
Policymakers want to keep the lira stable before elections in May and have sought to diminish the use of foreign currency transactions in the banking system. The lira has weakened this month as customers sought hard currencies to shield themselves from volatility around the elections.
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