Republic of Türkiye: Financial System Stability Assessment

IMF Staff Country Reports, January 18, 2023

Source details

Türkiye’s bank-dominated financial sector has grown markedly and shown areas of resilience since the last Financial Sector Assessment Program (FSAP).
Macrofinancial volatility has risen significantly.
Foreign investors have receded from local markets.
Demand for dollarized and state-guaranteed foreign-exchange (FX) protected Lira deposits has risen.
A deeply negative real policy interest rate exists 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.

Increased macrofinancial volatility and reduced foreign investor participation elevate systemic risk.
Higher demand for dollarized and FX-protected Lira deposits implies elevated FX asset and FX liquidity risk for the financial system.
Rapidly tightening global financial conditions compound domestic vulnerabilities.
The report addresses meeting FX liquidity, outflow scenario, stress test result, and volatilitybased FX rule considerations included in the keywords and subject matter.

Subject areas include: Commercial banks, Economic sectors, Financial institutions, Financial sector, Financial Sector Assessment Program, Financial sector policy and analysis, Financial sector stability, Foreign exchange, International organization, Monetary policy.
Keywords explicitly listed: Commercial banks, Financial sector, Financial Sector Assessment Program, Financial sector stability, FX asset, FX intervention, FX liquidity risk, Global, meeting FX liquidity, outflow scenario, stress test result, volatilitybased FX rule.