On 1 June 2020, the CBRT hosted the 43rd Meeting of the Central Bank Governors’ Club of Central Asia, Black Sea Region and Balkan Countries (Governors’ Club), which was founded upon the initiative of the CBRT and whose secretarial work is also undertaken by the CBRT. The 44th meeting of the Club was hosted by the Bank of Russia on 5 November 2020. Both meetings were held virtually. In light of the global economic and financial outlook, the participants at these meetings discussed the effects of the COVID-19 pandemic on member states’ economies, the policy responses in effect, and the policy priorities to adopt in the recovery process. Central bank digital currencies constituted another item on the agenda.
On the other hand, the Monetary Policy and Financial Stability Working Group, established to increase cooperation among the Governors’ Club member countries and co chaired by the Bank of Russia and the CBRT, held its fifth meeting in Istanbul on 28 February 2020 hosted by the CBRT, and its sixth meeting virtually on 21 September 2020 hosted by the Bank of Russia. The Working Group meetings, which serve to help with the preparations of the Governors’ Club meetings, also addressed the global economic and financial outlook, and central bank digital currencies.
Pioneered by the CBRT in the scope of the secretarial duties regarding the OIC-COMCEC Central Banks Forum established under the Organization of Islamic Cooperation (OIC), the second meeting of the Forum took place via a video conference on 7 October 2020. The main themes of the meeting included the global and OIC economic outlook as well as the policy responses to mitigate the effects of the COVID-19 pandemic. The post-pandemic challenges and opportunities, and the contribution of Islamic finance to recovery efforts were also discussed at the meeting.
Under the preparatory work for the 2020 Economic Survey of Turkey as part of the country reviews issued every two years by the Economic and Development Review Committee (EDRC) of the Organization for Economic Co-operation and Development (OECD), a High Level Policy Mission took place on 8 October 2020 via a video conference. The Survey of Turkey meeting was held on 12 November 2020 with the participation of the OECD-EDRC officials and the Turkish delegation, including the CBRT. The preparations and coordination of these meetings were carried out jointly by the CBRT and the Republic of Turkey Ministry of Treasury and Finance.
Moreover, in 2020, the CBRT continued to carry out preparatory work on the agendas of the periodical meetings held by the International Monetary Fund (IMF), the G20 and the Bank for International Settlements (BIS). Accordingly, coordination was established with internal and external stakeholders.
The term of the Note Purchase Agreement signed between the CBRT and the IMF on 17 October 2013 in the scope of the Bilateral Borrowing Agreements, which rely on the agreement reached between G20 countries at the G20 Leaders’ Summit in June 2012 to bolster the IMF resources, expired on 31 December 2019. However, the term of the Agreement was extended to 31 December 2020. On 8 October 2020, the CBRT signed a new Note Purchase Agreement covering the period between 1 January 2021 and 31 December 2023, to continue its contribution to the IMF resources.
The CBRT continued to seek stronger communication and bilateral cooperation with other central banks, despite the challenges brought by the COVID-19 pandemic. Accordingly, to lay the groundwork for enhanced cooperation in the field of central banking, a memorandum of understanding was signed with the Central Bank of Libya on 31 August 2020 and with the Central Bank of the Republic of Azerbaijan on 18 December 2020. With these memorandums of understanding, the number of central banks with which the CBRT officially collaborates reached 34 in 2020.
With a view to supporting Turkey’s efforts to encourage the use of local currencies in international trade as well as supporting financial stability, the CBRT continues its dialogue with foreign central banks for the establishment of bilateral swap agreements. In this regard, an amendment agreement was signed on 17 May 2020 to update the swap agreement signed with the Qatar Central Bank in 2018.
To contribute to the accurate and precise communication of its policy actions to foreign stakeholders, the CBRT held a briefing on Turkey’s macroeconomic outlook and the CBRT’s monetary policy on 21 January 2020 for the economic and commercial attachés of G20 member countries in Turkey. The briefing was attended by the Australian Ambassador, attachés from the Embassies of Germany, Indonesia, France, South Africa, South Korea, India, the United Kingdom, Italy, Japan, Canada, Mexico, Russia, and Saudi Arabia as well as by the representative of the European Union Delegation, and the Bundesbank and Bank of Italy representatives in Turkey. In addition, the Governor and Deputy Governors had bilateral meetings with the officials of the US and the UK diplomatic missions in Turkey.
As part of continuous mutual dialogue at the highest level, bilateral meetings were organized with Governors and Deputy Governors of the central banks of Georgia, Libya and Malaysia. The economic outlook and opportunities for bilateral cooperation were the main agenda items of these meetings.
In support of ongoing efforts to foster international cooperation in recent years, the CBRT organized technical cooperation activities with partner central banks through video conferencing in 2020. By this way, not only challenges imposed by travel restrictions and health risks caused by the COVID-19 outbreak eliminated, but also a continuation of technical cooperation between the CBRT and peer central banks was achieved. In this respect, among the CBRT’s international partners, intensive cooperation programs were conducted online with the central banks of Italy, the United Kingdom, Macedonia, Malaysia and Indonesia. Further efforts were made to enhance cooperation and strengthen professional networks with other partners in view of mutual needs. Accordingly, within the framework of the bilateral cooperation strategy of the CBRT, 17 video conferences were held with 10 partner central banks.
On the other hand, to be aligned with the best practices in the field of central banking as part of the CBRT’s strategic targets and internal projects for 2020, the Bank hold written consultations with other central banks under 16 different projects, and responded to 10 written information requests made by foreign central banks.
Established in 2017 to enhance the effectiveness of the cooperation between the CBRT and foreign central banks and to allow the CBRT departments to benefit more from such cooperation, the “Committee of Cooperation with Central Banks” continued to coordinate the process of technical cooperation in 2020. Having met on 3 March 2020, the committee assessed the activities held in 2019 and planned for 2020. Traditionally held four times a year, the committee meetings were suspended due to health risks caused by the COVID-19 pandemic, and necessary coordination was performed one-on-one with the departments. Moreover, throughout the year, the committee shared periodic updates on cooperation with foreign central banks, assessed department demands and worked on the cooperation-planning schedule for 2021.
Some working groups that the CBRT is a part of maintained their activities in 2020. Accordingly,
To enable the exchange of views and experience among the users of banknote processing systems (BPS) and the renovation of the systems parallel to technological improvements, representatives from the central banks and banknote printing plants using the BPS machinery established the “BPS International Users Group”. As a member, the CBRT attended its annual meeting, which was organized by Giesecke & Devrient, a company of German origin, on 29 September 2020.
As a member of the Central Bank Counterfeit Deterrence Group (CBCDG), the CBRT participated in its virtual Plenary Meeting on 3 December 2020. The CBCDG Plenary Meetings are held annually and are attended by the European Banknote Conference delegation presidents of member states and representatives of members other than the European Banknote Conference. At the meetings, the CBCDG activities are explained, decisions are taken and the CBCDG budget is approved.
National and International Organizations
To foster mutual relations and cooperation with other countries’ central banks and international agencies and organizations, the CBRT conducted meetings, conferences, seminars and workshops for the discussion of current issues on the world’s and Turkey’s economic agendas. In 2020, international meetings were held in person in January and February and online from March to December.
Events attended by acclaimed academics, banking and financial industry representatives, central bankers and officials of international organizations are listed below:
In addition, the Governor hosted breakfast meetings with academics in Ankara and Istanbul in December.
The following events were organized to foster communication and motivation both within and among departments and employees within the CBRT:
Turkey’s screening process, which is the first phase of EU accession negotiations after Turkey was given a candidate country status by the EU, began on 3 October 2005 and ended on 13 October 2006. The EU harmonization process of Turkey continues, although no significant progress has been made.
The current situation in EU Chapters that directly concern the CBRT is as follows: negotiations on chapters “18. Statistics” and “32. Financial Control” were opened on 26 June 2007, while chapters “4. Free Movement of Capital” and “17. Economic and Monetary Policy” were opened to negotiations on 19 December 2008 and 14 December 2015, respectively. Chapter “9. Financial Services” is one of the eight chapters that were suspended by a resolution passed at the EU summit of 14-15 December 2006, mandating that their negotiations be blocked until the EU Commission verifies that Turkey fulfills its commitments with respect to Southern Cyprus. Nevertheless, in the framework of harmonization with the EU acquis in Chapter 9, on 27 June 2013 Turkey put into force the Law No. 6493 regarding Payment and Securities Settlement Systems, Payment Services and Electronic Money Institutions. This Law also provides harmonization with the relevant EU legislation in Chapter “4. Free Movement of Capital.” Chapter “33. Financial and Budgetary Provisions” was opened to negotiations on 30 June 2016. However, one more technical criterion has been introduced for the provisional closure of these negotiations in addition to the full implementation of the Annex Protocol.
Since the onset of technical negotiations with the European Commission, three of six closing benchmarks for Chapter “32. Financial Control” have been satisfied. Of these three benchmarks, the CBRT has contributed to the closing criterion of “legal and administrative alignment with the Council Regulation (EC) 1338/2001 laying down measures necessary for the protection of the euro against counterfeiting.” Among the chapters with which the CBRT is indirectly involved, Chapter “28. Consumer and Health Protection” was opened to negotiations on 19 December 2007, Chapter “6. Company Law” on 17 June 2008, and Chapter “16. Taxation” on 30 June 2009. Opening benchmarks have been established for Chapter “19. Social Policy and Employment,” while Chapter “2. Free Movement of Workers” is still under review by the European Council.
The CBRT continues to provide the Turkish Ministry of Foreign Affairs, Directorate for EU Affairs with information concerning the developments in the chapters for which it is responsible so that the Ministry can monitor the progress being made in Turkey’s harmonization with the EU Acquis and forward this information to the European Commission.
Furthermore, the Bank remained in economic and financial dialogue with the EU. Due to the COVID-19 outbreak, the European Commission decided that negotiations regarding the joint conclusions on economic and financial dialogue between the EU and candidate countries (Albania, Macedonia, Montenegro, Serbia, Bosnia and Herzegovina, Kosovo, and Turkey) prepared by the Secretariat of the Economic and Financial Committee be conducted in writing in 2020. The text of the joint conclusion reached the final stage of approval at the Economic and Financial Dialogue between the EU and the Western Balkans and Turkey Meeting. Therefore, preparations for the EU Commission Economic and Financial Committee Meeting of Experts and the High Level Officials Meeting of the EU Commission Economic and Financial Committee, which normally take place in Brussels every year, were completed by the European Central Bank officials and CBRT officials via video conferencing.
The Economic and Financial Dialogue between the EU and the Western Balkans and Turkey meeting was held virtually on 19 May 2020 due to the COVID 19 pandemic. This meeting, which is the highest-level meeting with respect to economic dialogue between the EU and candidate countries, was attended by economy/finance ministers of member and candidate states. At this meeting, Economic Reform Programs (ERP) were reviewed and the text of the joint conclusion was approved as agreed upon during the negotiations. Moreover, representatives of candidate countries made short speeches on the year’s theme, “economic outlook and measures taken within the scope of COVID-19”.
The European Commission visits Turkey every year to discuss Turkey’s ERP. With regard to ERP preparations for 2021, the meeting with the European Commission officials was held virtually on 9 November 2020 due to COVID 19 restrictions, and shed light on economic and monetary policy developments in Turkey.
Meanwhile, the spring and fall Economic Forecast by Candidate Countries meetings that are held twice a year in Brussels by the European Commission took place via video conferencing due to COVID-19 on 17 April and 12 October 2020, respectively. During these meetings, EU Commission economists and other participants discussed economic and financial forecasts, data and information on related matters.
On chapters that fall within its mandate, the Bank contributed to the preliminary study carried out in order to update the National Action Plan to cover the years 2020-2023, which is one of Turkey’s main road maps in the EU accession process.