Finance Minister Şimşek: Turkey’s KKM scheme now at zero
Turkish Finance Minister Mehmet Şimşek has confirmed that the balance of Turkey’s currency-protected deposit scheme, known as KKM (Kur Korumalı Mevduat), has been reduced to zero.
The minister stated that this achievement marks the reaching of " one of the major goals of our programme," signalling a significant milestone in the nation' s economic policy.
According to Şimşek, the KKM balance fell by 4 million Turkish lira (TL) over the past week before reaching zero.
This represents a full liquidation of deposits under the scheme, which has played a central role in the Turkish economy over recent years. The KKM scheme was introduced at the end of 2021 to protect savers against the devaluation of the Turkish lira and to encourage deposits in the national currency.
It provided compensation to depositors for losses caused by fluctuations in exchange rates, which led many to prefer holding money in lira rather than converting it to foreign currency.
Although the KKM scheme initially helped stabilise the lira, it also incurred significant costs for the Turkish treasury and the central bank.
State funds were used to cover the difference between the deposit interest rate and losses from currency devaluation, which placed pressure on the national budget and complicated the central bank' s monetary policy. The winding down of the KKM is a central element in the Turkish government' s transition to a more orthodox economic policy, led by Finance Minister Şimşek.
By removing this scheme, potential state liabilities are reduced, and the central bank is granted greater freedom to manage monetary policy independently.
This is crucial for Turkey’s goal of combating inflation and achieving long-term economic stability.
For the Turkish economy, this signifies a lighter burden on public finances, which in turn could help release resources for other investments.
It also signals an improvement in the investment climate by promoting greater predictability in currency and interest rate markets.
Stabilising the economy is beneficial for Turkish households and businesses, and may also indirectly influence cost levels and the travel experience for tourists.
Source: Haberglobal
