Türkiye's central bank moves to strengthen financial markets

The Central Bank of the Republic of Türkiye announced on Thursday a series of steps to strengthen financial market functioning and manage Turkish lira liquidity after reviewing existing facilities. The bank cited recent domestic market developments as the immediate trigger for the policy adjustments.

Funding and collateral

The monetary authority will increase the volume of one-week repo auction funding when necessary, calibrating injections to prevailing liquidity conditions. It will also revise downward the collateral haircuts applied in central bank markets, easing banks' access to liquidity by increasing the funds they can raise against pledged assets.

Additionally, the CBRT will adjust lenders' borrowing limits at the Interbank Money Market based on the banking system's aggregate balance sheet metrics. "The CBRT will closely monitor the liquidity conditions and take any additional measure when needed," the bank said, adding that it stands ready to intervene further should stress emerge.

Implementation

The central bank has not specified a timeline for the new borrowing limits, though officials indicated that adjustments remain contingent upon ongoing assessments of systemic liquidity needs. Policymakers will deploy additional tools if market conditions deteriorate, according to Thursday's statement.