“New currency protected Turkish Lira deposits have reached 23.8 billion TL ($ 2.24 billion) to date,” President Recep Tayyip Erdoğan said in a television interview on Friday evening.
Speaking on an A Haber program, Erdoğan added that the rapid absorption of the amount of currency-protected lira deposits, which was recently introduced by the Turkish government to combat currency fluctuations, dollarization and high inflation, shows that “the Turks have put their trust in Turkey’s new economic system” which prioritizes growth, production, exports and a high employment rate.
The president also said his government would take any other necessary action to tackle “unhealthy fluctuations in the value of foreign currencies”.
“Our citizens now have two insurances: one from the Turkish Central Bank and the other from the Treasury,” he said. “Therefore, there will be no loss for our citizens.”
“God willing, the stabilization of the value of foreign currencies against the Turkish lira will soon be achieved,” Erdoğan added.
Earlier in the same day, the Treasury and Finance Ministry revealed new details on the recently announced deposit protection program intended to stem the currency crisis by ending dollarization in Turkey.
According to the ministry statement, people residing in Turkey can benefit from the exchange-protected Turkish lira deposit system and, contrary to recent rumors, it will be possible to benefit from the mechanism more than once. There will be no upper or lower limit.
Speaking to a broadcaster, Treasury and Finance Minister Nureddin Nebati said Thursday evening that Turkey’s economic model would produce positive results and rapid transformation before next summer.
The project was announced Tuesday by the ministry.
Commenting further on the country’s economic model, Nebati told NTV that “the model is based on a high level of exports, reducing the current account deficit and reflected well-being for society as a whole.”
Currency protected lira deposit accounts will have four time options: three, six, nine and 12 months.
The minimum interest rate that banks will charge on currency-protected lira accounts will not be less than the one-week repo rate determined by the Central Bank of the Republic of Turkey (CBRT), according to the press release from Ministry of the Treasury. He added that the maximum interest rate to be charged by banks can be set at a maximum of 300 basis points above the minimum interest rate.
The maximum interest rate can be updated by the ministry and will be valid for accounts opened after the update.
This application will be made within the framework of the banking principles of participation for lenders who operate within the framework of the Islamic financial system, commonly known as participation banks in Turkey, and for lenders whose main principles include operating on an interest-free mechanism.
The CBRT now publishes parity rates against foreign currencies every morning at 11 a.m. local time.
In the new system, comparing exchange rates at the beginning and end of maturity of resident natural persons accounts, the central bank will pay the difference, the greater of the two, to depositors on the same day.
In the new system, regardless of exchange rates, depositors will receive the principal and the interest / profit share.
In the days following the announcement of the new regime, the Turkish lira returned from a historic low of 18 per dollar, starting to offset losses which reached 60% in the year.
On Thursday, the lira was on track for its best week in two decades, rallying as much as 10% to 10.25 against the dollar, its highest level in a month.