(More Bank) – Turkey has reduced the amount of liquidity that lenders must hold for the first time in six months, while the central bank is trying to stimulate credit growth without signaling a more radical change in its restrictive policy.
While its monetary crisis parameters were waiting for three consecutive meetings, the central bank announced over the weekend that it would reduce requirements for reserve requirement ratio. QNB Finansbank estimates that this transfer will generate 3.3 billion lire ($ 623 million) and $ 2.3 billion in the financial system.
Although the central bank did not reveal the amount of funds that would be released, Governor Murat Cetinkaya recently said that measures taken to manage liquidity for financial stability would not necessarily mark a change in monetary policy.
The relatively small amounts covered by the decision suggest that the impact on monetary conditions will be limited, according to analysts QNB Finansbank, Erkin Isik and Deniz Gokce. "But this will support the continuation of a trend of moderate recovery recently observed in loan growth," they said in a report sent via email.
Reserve reserve ratios were reduced by 100 basis points for deposits and participating funds with maturities of less than one year and for other liabilities with less than three years. The ratios were reduced by 50 basis points for all other liabilities, the central bank In a statement released Saturday, lenders will also be able to hold 10% of their required gold reserves to put off, instead of 5%. The total amount of loans granted by Turkish banks rose to 2,400 billion pounds in December
The Turkish economy probably went into recession after limiting last year, after two consecutive quarters of contraction, due to the fall of the lira and the resulting increase in borrowing costs for the largest economy from the Middle-East. Real bank credit decreased by 7.2% on a quarterly basis in the last three months of 2018.
Turkey last lowered reserve requirement ratios for foreign currency and lira liabilities in August when its currency was in free fall. Cetinkaya said last week that the central bank's use of the tool helped to ease the extreme market volatility the country had experienced last year.
IS Investment announced that the central bank's liquidity adjustments should be closely monitored for their implications for the monetary policy stance.
"If new measures are taken to ease the liquidity, it could affect the tight position of the bank and the currency," said IS Investment analysts in a report.
–Assistance of Onur Ant.
To contact the reporters on this story: Ugur Yilmaz in Istanbul at uyilmaz@More Bank.net Cagan Koc in Istanbul at ckoc2@More Bank.net
To contact the editors responsible for this story: Onur Ant at oant@More Bank.net, Paul Abelsky, Amy Teibel
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