Raising the Rates Without Raising the Rates.

I was warning about one important thing since the FX volatility hedged-deposit scheme was first introduced. I said, “Interest rates offered by banks for this scheme should not have a ceiling limit. If they have, the entire burden will fall on the Treasury.” I think the problem has finally been understood or it has been realised that this instrument can no longer be sustained.


Perhaps this is the reason why investors, who are asking me countless questions on the phone, were so confused about this TRY deposit scheme. The interest rate on FX volatility hedged deposits was increased not because the Treasury gave up paying its commitment in the previous period, but because it no longer wants to undertake such a commitment. As far as I understand some of the burden created by this instrument, which was invented in order to keep the interest rates under control or to create such an impression, will be transferred to banks in 2023.


The messages sent to our phones tell us that banks that do not fulfil their TRY deposit obligations offer interest rates of up to 30%, which causes savings to move from one bank to another. If the situation does not change soon, banks that fulfil their TRY deposit obligations will similarly offer high interest rates as well. Of course, this competition may calm down once the banks that offer 30% interest achieve their target ratios. For now, I could say that banks are trying to be careful about this issue.


We might also see a big competition among banks to attract the savings of those who will benefit from elimination of age requirement for retirement, also known as EYT in Turkey. This competition will inevitably cause deposit rates to go up and the banks will have to say goodbye to the astronomical profits they made throughout last year. The BRSA and the Central Bank have regulations in place that restrict the rise of interest rates in loans. They probably think that this method will help everything go back to the way it was before. I’m not sure about that but I do know that nobody remembers the original version of the legislation and fiscal practices anymore. I more and more believe that nothing will ever be the same.