IMF Staff Country Reports

Türkiye’s bank-dominated financial sector has grown markedly and shown areas of resilience since the last Financial Sector Assessment Program (FSAP). However, macrofinancial volatility has risen significantly, foreign investors have receded from local markets, and demand for dollarized and state-guaranteed foreign-exchange (FX) protected Lira deposits has risen alongside a deeply negative real policy interest rate set against the backdrop of rapidly tightening global financial conditions. An array of idiosyncratic measures has been deployed that attempt to offset the highly negative policy rate and achieve multiple objectives.