Bloomberg: Turkey plans alter “asset ratio” to boost TL deposits

Turkish regulators are planning to make it more attractive for commercial banks to hold lira deposits to help foster confidence in the currency following Thursday’s central bank interest-rate hike.

The banking regulator, known as BDDK, will announce soon details of the tweak to the so-called “asset ratio,” officials familiar with the matter said, asking not to be identified in line with government policy.
The regulator declined to comment.

Turkey Tweaks Key Banking Ratio to Slow Credit After Lira Plunge

The ratio will either be lowered like last month or the way it’s calculated will be altered, the officials said. The regulator has been trying to unwind some of the earlier credit boom by making similar changes to the ratio it introduced at the peak of the pandemic to mitigate the fallout from the
coronavirus. The asset ratio sets a performance indicator for commercial banks by compelling them to extend credit and buy government debt. The failure to meet those requirements set by
the regulator can result in fines.

According to most recent official data, the average rate on three-month Turkish lira deposits stood at 13.2% as of Nov. 13.

Annual inflation has been hovering just under 12% since July.