Turkish central bank announced on Monday that it decided to limit maturity periods for foreign currency-protected deposit accounts as part of its exit strategy from the scheme.
In a statement, the central bank said it decided to terminate account openings and renewals with six and 12-month terms for currency-protected accounts converted from foreign currencies and gold.
“As part of the strategy to phase out FX-protected deposit accounts (KKM accounts), longer-term maturities for new and renewed accounts have been discontinued,” the Central Bank of the Republic of Türkiye (CBRT) said in a statement.
“The Central Bank of the Republic of Türkiye has decided to terminate the opening and renewal of FX-protected deposit and participation accounts -converted from FX and gold- with maturities of six months and 12 months as of Jan. 20, 2025,” it added.
The bank announced earlier that it planned to terminate the so-called KKM scheme this year as it continues to simplify the macroprudential framework.
“As the disinflation process becomes more evident in 2025, demand for Turkish lira assets will continue. In view of the rise in the ratio of Turkish lira deposits and the fall in KKM accounts, the CBRT will continue to simplify the macroprudential framework and terminate the KKM scheme in 2025,” the CBRT said late in December, announcing its policy road map for 2025.
The volume of FX-protected accounts has steadily declined for over 70 weeks, as authorities announced in the summer of 2023 the plans to scale back the scheme.
Under the scheme, adopted in late 2021 to help reverse dollarization and counter a steep fall in lira, the central bank has been protecting deposits by covering depreciation costs.
However, amid the shift to more conventional macroeconomic policies, the authorities began with steps to gradually exit from the scheme, which also weighed heavily on the budget.
The share of the Turkish lira in total deposits, meanwhile, continued to increase and stands at 58.7% as of Jan. 3, according to the central bank data.
