Page 19 - TURKRptFeb22

The spread over the policy rate (14%) for 10-year domestic government bonds has jumped to a record high of 10pp.
Turkish lira credit and deposit rates at the banks have also boomed. FX-linked deposits at Turkish banks have extended record levels. Central bank reserves declined to record lows.
The remaining few foreign portfolio investors fled.
On February 2, Turkey’s finance minister Nurettin Nebati said that a total of TRY272bn of deposits (around 5% of the overall TRY 5 trillion of deposits in the Turkish banking system) had been converted to date under the FX-guaranteed scheme, while TRY113bn ($8bn) had come from FX-linked deposits.
On February 4, the head of the banking watchdog BDDK said that the overall figure reached TRY290bn.
In calculating the dollarisation of bank deposits in Turkey, deposits under the FX-guaranteed scheme are added to the FX-linked deposits. FX-linked deposits are seen as FX on bank balance sheets while deposits under the FX-guaranteed scheme are seen as lira deposits. The only difference is that the central bank and the Treasury carry the FX risk attributed to the deposits under the scheme rather than banks.
19 TURKEY Country Report February 2022 www.intellinews.com