t24.com.tr
TCMB Successfully Ends KKM Program, Reducing Balance Sheet Risk
The Turkish Central Bank (TCMB) successfully concluded its Kur Korumalı Mevduat (KKM) program in August 2025, reducing its balance from over \$140 billion to \$11 billion through a gradual phase-out that involved adjusting reserve requirements and interest rates, leading to increased TL deposits and reduced risks on the TCMB's balance sheet.
- What were the key strategies and outcomes of the Turkish Central Bank's phase-out of the Kur Korumalı Mevduat (KKM) program?
- The Turkish Central Bank (TCMB) successfully ended its Kur Korumalı Mevduat (KKM) program, a protected deposit scheme, in August 2025. This was achieved through a gradual phase-out, reducing the KKM balance from over \$140 billion in mid-2023 to \$11 billion by August 21, 2025. The TCMB's blog post highlights this as a key step in strengthening monetary policy transmission and reducing risks on its balance sheet.
- How did changes to reserve requirements and interest rates influence banks' lending decisions and the shift from KKM to TL deposits?
- The TCMB's strategy involved adjusting reserve requirements and interest rates to influence bank lending choices and incentivize Turkish Lira (TL) deposits. The declining volatility of the exchange rate also contributed to the shift from KKM to TL deposits, with the TL deposit share rising above 60 percent by August 19, 2025, while the KKM share fell to 1.8 percent. This outcome is linked to macroeconomic stability and the success of the TCMB's monetary policy.
- What are the broader implications of ending the KKM program for the future effectiveness of the Turkish Central Bank's monetary policy and financial stability?
- The successful termination of the KKM program signals enhanced effectiveness of the TCMB's monetary policy tools. The reduced reliance on this unconventional instrument strengthens the bank's ability to manage inflation and maintain financial stability in the future. The experience also provides valuable insights into managing similar programs and the impact of macroeconomic factors on currency stability.
Cognitive Concepts
Framing Bias
The headline and introduction emphasize the successful conclusion of the KKM phase-out and highlight positive outcomes like reduced risk to the central bank's balance sheet. This framing prioritizes the positive aspects and may downplay any potential challenges or lingering concerns. The language used is celebratory in tone, which could influence reader perception.
Language Bias
The language used is largely positive and celebratory, describing the KKM phase-out as a 'success.' Terms such as 'successfully concluded' and 'positive impacts' create a positive bias. More neutral language could be used, such as 'the phase-out was completed' and 'observed effects' to describe the outcomes.
Bias by Omission
The analysis focuses primarily on the success of the KKM exit strategy and the resulting positive impacts on the Turkish economy. However, it omits discussion of potential negative consequences or criticisms of the KKM policy itself. While acknowledging space constraints is valid, a brief mention of opposing viewpoints or potential downsides would enhance the article's objectivity.
False Dichotomy
The analysis presents a largely positive view of the KKM phase-out, implicitly suggesting it was the primary driver of improved economic indicators. It doesn't fully explore alternative explanations for these improvements, creating a false dichotomy between the KKM policy and other potential factors contributing to economic stability.
Sustainable Development Goals
The elimination of the KKM scheme aims to reduce risks in the Central Bank balance sheet and strengthen the transmission of monetary policy to banks' TL funding costs. This can contribute to a more stable and equitable financial system, reducing potential inequalities stemming from access to and benefits from the scheme.