Foreign Exchange Protected Deposit Accounts Balance Completely Zeroed Out
While the balance in Foreign Exchange Protected Deposit accounts, introduced to curb currency shocks in the Turkish economy, has been zeroed out, Treasury and Finance Minister Mehmet Şimşek announced that the process was successfully completed.
According to the latest data shared by the Banking Regulation and Supervision Agency (BDDK), the balance of Foreign Exchange Protected Deposit accounts has reached zero, thereby completing a process lasting approximately five years. Treasury and Finance Minister Mehmet Şimşek evaluated this development as a successful exit.
Zeroing of the Balance
According to BDDK data, the balance of Foreign Exchange Protected Deposit accounts was completely zeroed out as of last week. The balance, which stood at 6.5 billion liras at the beginning of the year, had recently dropped to 4 million liras.
The Beginning of the Practice
Approximately five years ago, the Turkish economy was facing a severe confidence and currency shock. While the Central Bank was cutting interest rates, inflation was rising, and savers were turning to foreign currency. The FX-Protected Deposit (KKM) system was introduced to break this vicious cycle.
Financial Costs
The system, which calmed panic and bought time during the crisis, transferred currency risk to the public balance sheet. The cost incurred through the Treasury and the Central Bank reached tens of billions of dollars.
Key Lessons Learned
No financial product can replace monetary policy, and public guarantees are actually risk transfers. Confidence in the Turkish lira is gained through stable policies, not regulations.