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Abolition of old regulatory rules
Officials began the policy normalization process by repealing some old regulations and raising Turkey’s key interest rate by a total of 3,400 basis points to 42.5%.
One of the goals of the new team was to gradually reduce the number of foreign currency-hedged accounts. Bloomberg News reported last July that Turkey would seek to end the program because it would put pressure on the lira and central bank reserves if large numbers of savers decided to opt out of the program and back on the dollar to switch.
Last November, Simsek told Bloomberg that given the normalization of monetary policy, an exit from KKM could be achieved without the need for any stimulus measures.
“The biggest incentive for these accounts is the tax relief,” he said, adding: “We will evaluate this situation next year. Therefore, the process of exiting KKM will continue successfully.”
Turkish banks will no longer offer foreign currency-protected lira deposit accounts for savings in regular lira accounts from January 1, state-run Anadolu Agency reported on Friday. Banks will continue to offer foreign currency protected accounts for foreign currency deposits.
Total deposits in foreign currency protected accounts in Turkey fell by 30.4 billion lira ($1.03 billion) to 2.65 trillion lira in the week ended December 22, banking regulator data showed.
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