A new instrument designed to protect people’s Turkish Lira savings kept in banks against volatilities in the exchange rate have become operational, the Treasury and Finance Ministry has announced.
President Recep Tayyip Erdoğan heralded the new financial mechanism, which would encourage people to hold lira savings rather than foreign currencies, on Dec. 20 following a cabinet meeting.
The lira gained ground against the major currencies overnight in the wake of Erdoğan’s announcement.
“This product is offered only to real persons and applies to three-month, six-month, nine-month and 12-month savings accounts and all banks can join the new system,”the ministry said in a statement on Dec. 21.
Under the new mechanism, which the ministry dubbed ‘Foreign Currency-protected Turkish Lira Deposit Account,’ the interest rates on deposits and the exchange rates at the opening and the maturity date of the deposit accounts will be compared, and the deposit holders will be remunerated from whichever is higher, the ministry explained, adding that no withholding tax would be levied.
Work is also underway to include the participation banks in the new mechanism, the statement said.
“We are continuing on our path with even greater determination with the economic manifesto our president has unveiled. Nobody should have any doubts: The Turkish economy will be the winner of the economic model which is focused on investment, production, employment and exports,” Treasury and Finance Minister Nureddin Nebati tweeted on Dec. 21.