ANKARA, June 25 (Reuters) – Turkey’s central bank took fresh steps on Sunday in line with its goals to increase functionality of market mechanisms, after it hiked rates to 15% from 8.5% this week.
Turkey’s securities maintenance regulation has been simplified to increase the functionality of market mechanisms and strengthen macro financial stability, the Turkish central bank said on Sunday.
In a statement, it said the decision was part of policies announced after the recent monetary policy committee meeting on Thursday, and the simplification process would continue in a gradual manner.
In a statement after the committee meeting, the bank said it would simplify and improve the existing micro- and macroprudential framework to increase the functionality of market mechanisms and strengthen macro financial stability.
According to an announcement in the country’s Official Gazette, the securities maintenance ratio that Turkish banks are required to allocate to their foreign currency deposit has been reduced to 5% from 10%.
With the new regulation, securities that banks must maintain ranged between 3% and 12% of their lira deposits. It was between 3% and 17% previously.
The new regulation also said banks whose lira deposits are less than 57% of total deposits will have to hold an additional seven percentage points of securities.
Previously the requirement of seven additional points applied to banks which held less than 60% lira deposits.
Reporting by Nevzat Devranoglu and Huseyin Hayatsever; Editing by Daniel Wallis
Our Standards: The Thomson Reuters Trust Principles.
Read More: Turkey central bank takes fresh measures for increasing functionality of market