Turkey’s central bank, under new governor Hafize Gaye Erkan, will ease banks’ security maintenance rule as its first step to simplifying policies that were previously adopted to boost Turkish lira savings.
The securities maintenance ratio has been lowered to 5 per cent from 10 per cent effective immediately, according to a decree published in the official gazette on Sunday.
This ratio was increased twice from 3 per cent to 10 per cent in the last two years in order to support the conversion of foreign currency deposits to lira deposits as a part of the “liraisation strategy”.
According to tweaks in the rule, if their share of lira deposits to total deposits is below 57 per cent, banks will need to increase the securities maintenance ratio by an additional 7 percentage points.
The previous threshold was 60 per cent. Banks will get a discounted securities maintenance ratio if they increase the share of their lira deposits to above 70 per cent.
The easing comes after Turkey’s Treasury and Finance Minister Mehmet Simsek promised a return to “rational” policies.
At Ms Erkan’s first monetary policy meeting last week, the central bank raised the interest rate by 650 base points to 15 per cent and signalled a “gradual tightening”.
Ms Erkan met bankers on Friday, and during her first ever public appearance she stated that they had requested a simplification of rules.
The securities maintenance regulation was simplified to increase the functionality of market mechanisms and strengthen macro financial stability, the central bank said in a statement published right after the publication of the official gazette.
Sahap Kavcioglu, who was the previous central bank governor, lowered the interest rate and followed unconventional economic policies, which fuelled the worst inflation crisis in decades and repelled foreign investors that Turkey relies on to plug its perennial current-account deficit.
Some of Darwish's last words
"They see their tomorrows slipping out of their reach. And though it seems to them that everything outside this reality is heaven, yet they do not want to go to that heaven. They stay, because they are afflicted with hope." - Mahmoud Darwish, to attendees of the Palestine Festival of Literature, 2008
His life in brief: Born in a village near Galilee, he lived in exile for most of his life and started writing poetry after high school. He was arrested several times by Israel for what were deemed to be inciteful poems. Most of his work focused on the love and yearning for his homeland, and he was regarded the Palestinian poet of resistance. Over the course of his life, he published more than 30 poetry collections and books of prose, with his work translated into more than 20 languages. Many of his poems were set to music by Arab composers, most significantly Marcel Khalife. Darwish died on August 9, 2008 after undergoing heart surgery in the United States. He was later buried in Ramallah where a shrine was erected in his honour.
South and West: From a Notebook
Joan Didion
Fourth Estate
Essentials
The flights Emirates, Etihad and Malaysia Airlines all fly direct from the UAE to Kuala Lumpur and on to Penang from about Dh2,300 return, including taxes.
Where to stay
In Kuala Lumpur,Element is a recently opened, futuristic hotel high up in a Norman Foster-designed skyscraper. Rooms cost from Dh400 per night, including taxes. Hotel Stripes, also in KL, is a great value design hotel, with an infinity rooftop pool. Rooms cost from Dh310, including taxes.
In Penang,Ren i Tang is a boutique b&b in what was once an ancient Chinese Medicine Hall in the centre of Little India. Rooms cost from Dh220, including taxes. 23 Love Lane in Penang is a luxury boutique heritage hotel in a converted mansion, with private tropical gardens. Rooms cost from Dh400, including taxes.
In Langkawi,Temple Tree is a unique architectural villa hotel consisting of antique houses from all across Malaysia. Rooms cost from Dh350, including taxes.
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
The advice provided in our columns does not constitute legal advice and is provided for information only. Readers are encouraged to seek independent legal advice.
