Foreword

Prof. Şahap Kavcıoğlu
Governor

Working for the welfare of the country since its foundation, the Central Bank of the Republic of Türkiye (CBRT) takes pride in completing 90 years of operations. In 2021, the CBRT continued to use its monetary policy and liquidity tools as necessary to achieve the sustainable price stability objective and support financial stability.

In 2021, global inflation increased rapidly due to supply constraints, the increase in commodity prices, and supply-demand mismatches, driven by the course of the pandemic. Although uncertainties heightened in some periods due the variants of the virus, global economic activity remained strong throughout 2021. Türkiye has also been affected by these developments. However, the spread of vaccination through the domestic population allowed the services, tourism and related sectors, which were adversely affected by the pandemic, to maintain their strength and led to a more balanced composition in economic activity. Against this background, the Turkish economy grew by 11% in 2021 and maintained its strong growth trend in the post-pandemic period. At the same time, the share of sustainable components in the composition of growth increased, as the contribution of net exports to growth increased significantly compared to previous years.

Having initiated a comprehensive policy framework review at the end of 2021 prioritizing the Turkish lira in all policy instruments, the CBRT will continue to conduct this process in 2022. Accordingly, the “Liraization Strategy”, which is the cornerstone of the CBRT’s policy review process, will support monetary policy instruments in the fight against inflation through three channels. Firstly, Turkish lira savings will be encouraged through FX-protected accounts and similar tools. Secondly, priority will be given to Turkish lira-denominated collaterals and instruments in accessing Turkish lira. Thirdly, necessary conditions will be established to meet Turkish lira funding needs of sectors that support the current account balance at suitable maturities.

The CBRT will also continue to safeguard financial stability, which is a supportive factor for price stability. Accordingly, in 2022, the CBRT will use all available policy tools in the most effective way to secure sound functioning of the monetary transmission mechanism and to limit risks to macrofinancial stability.

The CBRT, acting in line with its remit of contributing to social welfare, is conducting its operations with an awareness of the importance of sustainable price stability for growth and increase of employment. I have full belief that we will achieve these goals with a resolute stance thanks to our organizational structure, qualified human resources, innovative approach and analysis capacity and advanced technological infrastructure. In the upcoming period, we will further contribute to the Turkish economy to achieve sustainable price stability within the framework of the Turkish Economy Model.