Central Bank Lowers Interest Rate Floor on Currency-Protected Deposits to Encourage Shift to TL Accounts
The Central Bank of the Republic of Turkiye (TCMB) has introduced measures to support the transition from Currency-Protected Deposits (KKM) to Turkish Lira (TL) deposits and reduce the prevalence of KKM accounts. In a directive sent to banks, TCMB lowered the minimum interest rate on KKM accounts from 80% to 70% of the policy interest rate. The exchange rate difference payable by TCMB at the end of the term will continue to be calculated based on the policy interest rate.
Additionally, it was announced that no “additional returns” will be provided for newly opened or renewed accounts. This change is expected to accelerate the reduction of KKM accounts and increase the share of TL deposits.
The new regulations will come into effect on July 22, 2024. Previously, the minimum interest rate on KKM accounts was set at 40%, equivalent to 80% of the 50% policy interest rate. This threshold has now been reduced to 35% under the new directive.
Source: AA / Prepared by Irem Yildiz
