Measures which have been taken in order to limit the negative impact of the global uncertainties caused by coronavirus epidemic on Turkey’s economy have already been pronounced on 17.03.2020. Press Release numbered 2020-21 dated 31.03.2020 has been issued by the CBRT on Additional Measures Against the Economic and Financial Effects of Coronavirus.
The following additional measures have been taken for the same purpose; (i) Strengthening the monetary transmission mechanism by supporting the Government Securities (GDDS) market liquidity, (ii) to increase flexibility in banks’ Turkish lira and foreign currency liquidity management and (iii) to ensure the uninterrupted continuation of the credit flow to the real sector and to support the exporters of goods and services affected by the epidemic with a SME-oriented approach.
- The Open Market Operations (OMO) portfolio direct purchase transactions which is being carried out within the limits determined in the Monetary and Exchange Rate Policy text of 2020 will be able to be carried out with front loading and if necessary, these limits can be updated according to market conditions. It is aimed to increase the efficiency of the monetary transmission mechanism by increasing the depth of the market, keeping the asset prices healthy and providing flexibility to the banks in liquidity management with these transactions.
- The Primary Dealer banks will be given the opportunity to sell the GDDS purchased from the Unemployment Insurance Fund to the CBRT within the conditions and amounts determined by the CBRT, or to increase the liquidity opportunity recognized by the framework of the OMO within the scope of the Primary Dealer system within certain rates for a temporary period. Thus, it is aimed to support financial stability by limiting the possible effects of the liquidity need of the Unemployment Insurance Fund on market functioning. The mentioned GDDS purchases will be evaluated outside the limits set for the OMO portfolio. The relevant parties will also be informed in detail regarding these transactions and criterias.
- It has been decided to include Asset-Backed Securities and Mortgage-Backed Securities in the cover pool within the framework of the Turkish lira and foreign exchange transactions carried out by the CBRT. Acceptance of these securities as cover will contribute to the increase of liquidity of similar issuances and deepening of capital markets, and will increase the flexibility provided to banks in Turkish lira and foreign exchange market liquidity management. Banks will also be informed in detail about the criterias for the securities to be accepted as cover and the limits regarding the mentioned opportunity.
- Limits will be increased in the targeted additional liquidity opportunities put into effect in order to keep the loan flow to the real sector uninterrupted. In this context, in addition to the up to 91 days maturity repo and Turkish lira swap targeted liquidity possibilities for 1 year maturity foreign currency, Turkish lira swap auctions with 6-month maturity foreign currency will be held. Regarding the auctions in this maturity, banks will be provided with TL, euro or gold equivalent Turkish lira liquidity at 125 basis points below the one-week repo auction interest rate, which is the CBRT policy interest rate.
- It has been decided to make Turkish lira denominated export and foreign currency earning services rediscount loans available in order to facilitate the access of companies that export goods and services to finance and to support the continuity of employment. Turkish lira denominated rediscount loans will be made available within the framework of the following principles:
- A total of 60 billion Turkish lira limit has been determined for the loans.
- 20 billion Turkish lira of this limit is allocated to the use of loan by Turk Eximbank, 30 billion Turkish lira to the public banks and 10 billion Turkish lira to other banks.
- Minimum 70 percent of the loans to be used by the banks other than Eximbank will be allocated to SMEs.
- Maximum loan amounts are determined as 25 million Turkish lira for SMEs and 50 million Turkish lira for other companies.
- Companies that can use foreign currency rediscount loans, companies that offer contracting services abroad and companies that participate in international fairs will be able to access to the loan facility.
- Loans will be applied at 150 basis points below the one-week repo auction interest rate, which is the CBRT policy rate.
- The commission rate of intermediary banks can be maximum 150 basis points.
- Loans will have a maximum term of 360 days and will be made available with the condition of keeping the employment level on March 1, 2020 with the commitment of export or foreign currency earning service, during the term of the loan.