According to the CBRT Law, one of the fundamental duties of the CBRT is to “take precautions for the enhancement of stability in the financial system and to take regulatory measures with respect to money and foreign exchange markets”.
The main duties of the CBRT regarding financial stability are to:
- Monitor the financial markets,
- Advise the Government on issues about the financial system,
- Determine the procedures and principles of reserve requirements and liquidity requirement by taking into account the liabilities of banks and other financial institutions,
- Determine the types and maturities of deposits accepted by banks as well as the maturities of participation accounts at special financial institutions,
- Establish, operate and supervise payment and settlement systems.
b. Role of the Monetary Policy Committee
Domestic and global developments related to financial stability, and the measures that can be taken against these developments are assessed by the Monetary Policy Committee at meetings. In addition, the Committee produces macroprudential policies to support financial stability, if deemed necessary.
c. Extraordinary Circumstances
Under extraordinary circumstances, the CBRT may take steps to safeguard financial stability. Particularly in cases where the resources of the Savings Deposit Insurance Fund (Fund) are insufficient, the CBRT may:
- Grant advances to the Fund,
- Extend credits to banks as the lender of last resort,
- Request necessary information from banks, other financial institutions, and other authorities for the purpose of monitoring financial markets.
d. Importance of Financial Stability
The CBRT considers financial stability, i.e. the existence of a sound and efficiently functioning financial system, as a vital component of its primary objective of achieving price stability.
To this end, the CBRT attaches utmost importance to:
- Identifying and monitoring structural and macroeconomic developments that could pose a systemic risk to financial stability,
- Taking measures against these risks in cooperation with relevant authorities,
- Monitoring the effectiveness and soundness of the financial sector as well as each individual institution if necessary,
- Following the international developments in financial stability, and evaluating these developments with regard to their impacts on the Turkish economy.