Download BULLETIN

BULLETIN
Issue: 14
CENTRAL BANK OF THE REPUBLIC OF TURKEY
June 2009
GOVERNOR YILMAZ’S PRESENTATION BEFORE THE COUNCIL OF MINISTERS, AND THE PLANNING
AND BUDGET COMMISSION
In accordance with the Law on the Central Bank of Turkey (CBT) and the principle of accountability, twice a year the Governor
submits report to the Council of Ministers and the Planning and Budget Commission of the Great National Assembly
of Turkey on operations of the CBT and current and future monetary policy actions. In this context, Governor Durmuş
Yılmaz delivered presentations to the Council of Ministers and the Planning and Budget Commission on 20-21 April 2009
respectively. The Governor provided information about the impact of the global financial crisis on the Turkish economy,
financial stability in Turkey, the inflation outlook and the monetary policy stance.
The main points of the presentations are as follows:
▶
A global financial crisis has been experienced since the second half of 2007. Although the most severe effects of this
financial crisis has emerged in developed economies since the second quarter of 2008, tightness in global credit
conditions deteriorate the financial conditions of developing countries.
▶
The stable and sound structure of the financial system in Turkey is the main element which enhances the resilience
of our economy against the global crisis. Furthermore, the strong foreign exchange reserve position of the CBT helps
eliminate the unfavorable effects of potential shocks and contributes to increasing confidence in the economy.
▶
An important effect of this global financial crisis on the Turkish economy is the sharp decline in economic activity.
Domestic demand indicators maintain their weak course, albeit a limited recovery has been observed recently. The
downward trend in bank loans has continued, and the decline in industrial production and capacity utilization have
become more apparent since December 2008.
▶
The CBT has taken the necessary measures to ensure the smooth functioning of liquidity channels in financial markets
during this period. Moreover, with the disappearance of global factors that were driving the inflation rate up, the CBT
started a rapid easing cycle. As the latest data about inflation rates are supportive of the rate cuts.
▶
It is forecasted that a recovery in economic activity will take time, downward pressure on inflation will continue and the
decline in inflation rates will increase in the short run.
To find out more: http://www.tcmb.gov.tr (Governor’s Remarks)
Central Bank Interest Rates
(Overnight, Simple, Percent)
Central Bank International Reserves
(Excluding Gold, Bio USD, Year-End)
80
20
70
18
60
16
50
14
40
30
12
20
10
Source: CBT
Source: CBT
2 Key Economic Indicators - Currency Issued
3 News and Publications from the CBT
4 At a Glance
BULLETIN
CENTRAL BANK OF THE
REPUBLIC OF TURKEY
2009*
2008
2007
2006
2005
2004
2003
2002
0
04-09
01-09
10-08
07-08
04-08
01-08
10-07
07-07
04-07
01-07
10-06
07-06
04-06
01-06
10-05
07-05
04-05
10
01-05
8
*As of 22 May 2009
CURRENCY ISSUED
Currency Issued and Velocity of Money
The term “currency issued” refers to the total volume of banknotes issued and circulated by the central banks in
the market. Central banks regulate this volume in various ways by regarding the liquidity demand in the market. In
Turkey, currency issued is generally determined by money demand, open market operations and foreign exchange
interventions made by the CBT.
Velocity of Money in Turkey
(GDP/Currency in Circulation, Right Axis) and CPI
(Year-on-Year Percentage Change)
The change in the volume of currency issued has
effect on the general price level and the total income
in the short run depending on the velocity of money.
Therefore velocity of money is an important variable
due to its close relation with the output gap and
general price level. The simplest way of calculating
the velocity of money is done by dividing the
nominal gross domestic product with the volume of
currency issued.
140
80
CPI (Left)
Velocity of Money (Right) 70
120
60
100
50
80
The velocity of money also depends on the structure
of production, existence of an effective financial
sector and the infrastructure of payment systems
in an economy. The advancements in such fields,
like the wide distribution of credit and debit cards,
can increase the velocity of money by replacing the
traditional cash based system with digital transactions
and virtual forms of payment. On the other hand,
lower inflation rates reduce the cost of holding
money balances and therefore decrease the velocity
of money.
40
60
30
2008
2006
2004
2002
2000
0
1998
0
1996
10
1994
20
1992
20
1990
40
Source: CBT, TURKSTAT
Central Bank Money (% Share, 2008)
Currency issued plays only a partial role in
the CBT’s ability to regulate money supply.
Deposits of the Banking Sector (41.28)
Another parameter to monitor monetary
policy applications is central bank money.
Extrabudgetary Funds (0.19)
Central bank money reflects all Turkish Lira (TL)
Deposits of Non-Bank Sector (0.19)
liabilities of the CBT to all other parties in the
Currency Issued (42.35)
economy. There are two important points to
Deposits of the Public Sector (2.48)
bear in mind about this issue. First, since central
Open Market Operations (negative) (13.51)
bank money only consists of TL liabilities, just
foreign exchange purchase or selling for TL
Source: CBT
affects its magnitude. Secondly, the change in
components of central bank money has the
same effect on the money supply regardless
of their diferences in terms of their creation or their way of entering the financial system. This means all changes in the
items consisting the central bank money have the same multiplier effect on the economy.
The values of central bank money in 2008 show a sum of 54.1 billion TL. The two major items consisting of the central
bank money are currency issued and the deposits of the banking sector. The other items are open market operations,
TL deposits of the public sector, funds, and deposits of the non-banking sector.
Currency Issued
Reserve Money
Central Bank
Money
Deposits of the Banking Sector
Funds
Deposits of Non-Banking Sector
Other Central
Bank Money
Open Market Operations
TL Deposits of the Public Sector
BULLETIN
CENTRAL BANK OF THE
REPUBLIC OF TURKEY
Required Reserves
Free Deposits
NEWS AND PUBLICATIONS FROM THE CBT
WORKING VISITS OF THE CENTRAL BANK OF AZERBAIJAN AND THE BANK OF ALBANIA
Upon the request of the Central Bank of Azerbaijan Republic and the Bank of Albania, the CBT organized training programs
on human resources activities of the CBT for these Banks on March 9-12 and March 16-18, respectively. Programs include
information about personnel recruiting, retirement process, performance management, in-service training, training programs,
postgraduate education and information technology operations in human resources management in the CBT.
THE 77th GENERAL ASSEMBLY OF SHAREHOLDERS OF THE CBT
The 77th General Assembly of Shareholders of the CBT was held on April 14,
2009 in the Head Office Conference Hall. At the meeting, the balance sheet,
profit and loss statement and proposed profit distribution of the year 2008 were
approved. In addition, Prof. Dr. Turalay Kenç was appointed as member of the
Board to complete the membership period of the former member until
April 30, 2010. Prof.Dr.Necdet Şensoy and Prof.Dr.Mustafa İlker Parasız, whose
terms of office were to expire on April 30, 2009, were reappointed to serve three-year terms. Also, Mehmet Tüfekçi, Prof. Dr.
Ekrem Yıldız, Abdullah Yalçın and Mustafa Saim Uysal were reappointed as members of the Auditing Committee.
INDEPENDENT AUDIT REPORT
Since 2000, the balance sheet and income and expenditure accounts of the CBT have been audited and the results have been
shared with the public as part of the accountability and transparency principles of the Bank. The last independent audit
report was released and announced to the public in April 2009 through the website of the CBT.
To find out more: http://www.tcmb.gov.tr (Publications/Periodic Publications)
INFLATION REPORT 2009-II
The Inflation Report 2009-II was released via a press conference with the participation of Governor
Yılmaz on April 30, 2009. The Report examines the recent macroeconomic developments on a local and
global scale, and presents updated medium-term inflation forecasts in the framework of the economic
developments in the last three months. The Report also includes six boxes which focus on recent
monetary policy decisions and economic developments regarding these decisions.
To find out more: http://www.tcmb.gov.tr (Publications/Periodic Publications)
NEW MEMBER OF THE MONETARY POLICY COMMITTEE
According to the CBT Law Article 22/A, board member Prof. Dr. Turalay Kenç was elected as the new member of the Monetary
Policy Committee on May 8, 2009.
To find out more: http://www.tcmb.gov.tr (General Information)
FINANCIAL STABILITY REPORT
The eighth issue of the biannual Financial Stability Report was released on 28 May 2009. The Report
evaluates international developments within the framework of the monetary and financial measures
taken to lessen the continuing negative effects of the global crisis including tightening credit channels
and worsening demand conditions on growth rates, unemployment rates and expectations. The Report
also examines the current macroeconomic developments in the Turkish economy and the financial
sector, including profitability, capital adequacy, credit and liquidity risks of the banking sector and the
financial infrastructure.
To find out more: http://www.tcmb.gov.tr (Publications/Periodic Publications)
WORKING PAPERS
▶
Financial Market Participation and the Developing Country Business Cycle
(Hüseyin Murat Özbilgin, Working Paper No. 09/04, April 2009)
▶
Design and Evaluation of Core Inflation Measures for Turkey
(Oğuz Atuk, Mustafa Utku Özmen, Working Paper No. 09/03, March 2009)
To find out more: http://www.tcmb.gov.tr (Publications/Research Papers)
BULLETIN
CENTRAL BANK OF THE
REPUBLIC OF TURKEY
AT A GLANCE
Current Account Deficit
CPI
04-09
01-09
10-08
07-08
Source: TURKSTAT, CBT
Primary Surplus / GDP
Total Public Net Debt Stock / GDP
1
10
0
0
2002
Source: Treasury
2008
20
2007
2
2006
30
2004
3
2008
40
2007
50
4
2006
5
2005
60
2004
6
2003
(Percent)
70
2003
7
2005
(Percent)
2002
04-08
01-06
2008 Q4
Source: CBT
01-08
2
10-07
20
07-07
4
04-07
25
01-07
6
10-06
30
2009 Q1
8
2008 Q3
35
2008 Q2
10
2008 Q1
40
2007 Q4
12
2007 Q3
45
2007 Q2
14
2007 Q1
50
07-06
(Year-on-Year Percentage Change)
04-06
(Quarterly, 12-Month Rolling Sum, Billion USD)
Source: Treasury
THE ANNUAL REPORT
The Annual Report is submitted to the General Assembly of Shareholders of the CBT. In the
firs chapter of the Report the governing bodies and the organizational structure of the CBT
take place. In the second chapter of the Report, the CBT’s operations are shared with the
public. This chapter includes issues such as price stability and monetary policy, financial
stability developments, payment and settlement systems, foreign exchange reserves and risk
management, European Union harmonization activities and communications policy, in the
context of the strategic plan of the CBT.
The Report also examines the comparative financial statements and profit and loss
statement of the CBT. Audit reports, activity based cost accounting at the CBT and
Turkey-IMF monetary relations are the other issues presented in the Annual Report.
To find out more: http://www.tcmb.gov.tr (Publications/Periodic Publications)
CBT Interest Rates*
Overnight (%)
Borrowing
Lending
9.25
11.75
Central Bank Foreign Exchance Reserves (As of 22 May 2009, Billion USD)
66.74
CPI (Annual % Change, April 2009)
6.13
* As of 15 May 2009.
Published quarterly by the Central Bank of the Republic of Turkey
Issue: 14 June 2009
Owner on behalf of the Central Bank of the Republic of Turkey and Responsible Editor:
Hüseyin Zafer
Publication:
Central Bank of the Republic of Turkey Banknote Printing Plant Department
Publication Board:
Cihan Aktaş - Tuğrul Gürgür - Tangül Hınçal - Mesut Kümbetlioğlu Zeynep Özge Yetkin - Mehmet Tamur - Canan Binal Yılmaz - Cem Gökçen Berkay Akışoğlu - Gonca Zeynep Özdemir - Emel Demirgören
- Özgür Balaban
BULLETIN
Distributed free of charge
CENTRAL BANK OF THE
REPUBLIC OF TURKEY
For Subscription: [email protected]
Central Bank of the Republic of Turkey
Communications and Foreign Relations Department
İstiklal Caddesi No: 10 06100 Ulus-Ankara Turkey
Phone: +90 (312) 310 36 46
e-mail: [email protected]