New era policies in the economy continue unabated. After President Recep Tayyip Erdoğan announced the cabinet on June 3, 2023, a new era began in the economy.
In the new period in which the all-out fight against inflation was prioritized, the Central Bank also entered a rapid tightening process in monetary policy. In the last 3 meetings, it increased the policy rate by 16.5 points from 8.5 percent to 25 percent.
While the policy change is taking place, steps are also being taken to encourage exit from exchange rate protected deposit accounts, which were previously used as an effective tool to prevent the tendency towards foreign currency. While doing this, a path is being drawn for banks to make it attractive for citizens to invest their savings in Turkish lira.
Today, implementation instructions were sent to banks for the same purpose.
To look at the changes made one by one:
1- The target for the increase in the share of TL in real person deposits in the total was increased by half a point to 2.5 percent. Banks will now enable their individual customers to switch to more TL deposits or renew their TL deposit accounts. The way to make this attractive is to offer higher returns for TL time deposit accounts. Currently, an average annual interest rate of nearly 41 percent is offered to 3-month TL deposits opened by banks. This rate was at 28 percent at the beginning of August. It is stated that within the scope of the transition targets to TL, higher interest rate levels for time deposits in banks may come to the fore.
2- The Central Bank also changed its commission application. Exchange rate protected deposit accounts will no longer be considered Turkish lira deposit accounts. Banks will pay commission based on the conversion and renewal rate to TL. Banks whose conversion rate to TL deposits and renewals exceeds 100 percent will pay a maximum of 4 percent annual commission. The commission rate will increase to 8 percent for banks below 100 percent.
3- While steps are being taken to combat inflation, incentives for selective loans such as exports and investments continue to prevent growth from being suppressed. The central bank’s latest implementation instruction also took a step to relax the credit flow.
It increased the invoice exemption limit for export and SME loans from 50 thousand lira to 250 thousand lira. It will no longer be necessary to document in which spending area the loans up to 250 thousand liras are used. If it exceeds this amount, it will need to be invoiced for use in specified spending areas. Otherwise, banks will have to establish securities equal to 30 percent of the loan amount they provide.
“The excess TL in the market will be withdrawn and directed to savings”
The common goal of all these steps is; Shifting consumer spending to investment and savings. Savings are evaluated in TL instead of foreign currency or other instruments. Thus, the demand-side pressure on inflation will decrease, and the excess TL in the market will be withdrawn and directed to savings. For this reason, TL is wanted to become attractive. Banks’ guidance is needed to attract savers’ interest in TL.