On August 29, 2015, the Central Bank of Turkey amended its
Communiqué on Reserve Requirements, increasing bank
reserve requirements for short-term foreign exchange non-core
liabilities. The liabilities subject to the new requirements
include repo transaction funds, utilized loans, net issued
securities, subordinated debt not included in banks' own funds,
net liabilities to headquarters abroad, and debt from credit card
In a separate action, the Central Bank also increased the
interest paid on Turkish lira reserves at the Central Bank.
The Central Bank's new reserve requirement ratios will apply
to liabilities incurred after August 28, 2015, effective from the
October 23 maintenance period. The changes are not retroactive and
the current ratios continue for liabilities incurred on or before
August 28 until their maturity.
New Reserve Requirement Ratios
Previous Reserve Requirement Ratios
One year or less
Two years or less
Three years or less
Five years or less
More than five years
The Central Bank also increased the interest paid on Turkish
lira-denominated required reserves deposited with the Central Bank
by 150 basis points. The increase will be phased in over the next
four months: (i) 50 basis points as of September 1, (ii) 50 basis
points on October 1, and (iii) 50 basis points on December 1.
The Central Bank's action is intended to incentivize banks
to increase long-term foreign exchange liabilities by increasing
the cost of holding short-term liabilities. This is expected to
increase bank resilience during a slowdown in short-term foreign
exchange inflows. Banks, however, may face greater pressure to
satisfy increasing reserve requirements. The increase in interest
paid for Turkish lira denominated reserves is intended to offset
bank losses due to the devaluation of the Turkish lira and rising
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