Optional Currency Protected Deposit (KKM) Summit Between CBRT and Banks

The Central Bank management and Bank representatives came together and the uncertainty about how the optional Currency Protected Deposit (KKM) transactions restricted by the Central Bank of the Republic of Turkey would be taken into account and whether they would continue to be made was discussed at the meeting.
It was stated that the Central Bank officials will listen to the demands of the banks and explain the reasons of the Central Bank, and that the harmonization of the legislation will be researched and worked on for a new model that develops the Currency Protected Deposit in a way that will not disturb all parties in order to solve the problem.
Issues such as whether the restrictions apply to live option currency-protected deposits (KKM) and which type of these transactions cause problems and discomfort in the Central Bank were discussed, and the banks listened to their reservations and solution suggestions.
At the meeting, it was stated that the Central Bank executives explained the reasons for the regulation and stated that the discomfort was caused by the demand for foreign exchange in the market.
It was stated that the regulation was made on the grounds that some banks, which carry out optional currency protected deposits (KKM), exchanged foreign currency to their customers and transferred TL to the Central Bank, and then bought the same amount of foreign currency from the market in order to hedge the position.
At the meeting, it was stated that the regulation will be implemented effectively for banks that act in this way, and it was stated that there is no problem for banks that trade the option with TL netting and manage them in their own positions.
At the meeting, various suggestions were discussed to solve the problem, and it was stated that a study would be conducted on a model that would appeal to both investors and the Central Bank of the Republic of Turkey and banks.