Republic of Türkiye: Financial System Stability Assessment

Author: International Monetary Fund. Monetary and Capital Markets Department

Volume/Issue: Volume 2023 Issue 304

Publication date: January 2023

ISBN: 9798400251528

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Topics covered in this book

This title contains information about the following subjects. Click on a subject if you would like to see other titles with the same subjects.

Banks and Banking , Finance , Money and Monetary Policy , International - Economics , FX liquidity risk , meeting FX liquidity , stress test result , FX intervention , volatilitybased FX rule , outflow scenario , FX asset , Financial sector stability , Financial Sector Assessment Program , Commercial banks , Financial sector , Global

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Summary

Türkiye’s bank-dominated financial sector has grown markedly and shown areas of resilience since the last Financial Sector Assessment Program (FSAP). However, macrofinancial volatility has risen significantly, foreign investors have receded from local markets, and demand for dollarized and state-guaranteed foreign-exchange (FX) protected Lira deposits has risen alongside a deeply negative real policy interest rate set against the backdrop of rapidly tightening global financial conditions. An array of idiosyncratic measures has been deployed that attempt to offset the highly negative policy rate and achieve multiple objectives.