A Glance at 2022

LIRAIZATION STRATEGY AND SUSTAINABLE PRICE STABILITY

In line with its objectives of achieving price stability and supporting financial stability, the CBRT continued to use monetary policy tools appropriately in view of free market conditions and requirements.

In January 2022, the CBRT announced that it was conducting a comprehensive review of the policy framework that prioritized Turkish lira in all its policy tools with an aim to create a foundation for sustainable price stability. Stating that restructuring the financial system with Turkish lira instruments would enable the sustainable foundation required for price stability, the CBRT shared its Liraization Strategy with the public and noted that this strategy was one of the fundamental elements of the policy review process.
The CBRT also emphasized that the Liraization Strategy was developed with a holistic approach that pivoted on the use of Turkish lira via new financial products, collateral diversification, and regulations concerning liquidity management. Accordingly, the liraization process aims to make the Turkish lira and Turkish lira-denominated assets the main store of value in the financial system, gradually increase the weight of Turkish lira items in the assets and liabilities of households, companies and the banking system, ensure the use of entirely Turkish lira assets in liquidity transactions, and make the Turkish lira the only medium of exchange in domestic commercial transactions.
The CBRT kept the policy rate (the one-week repo auction rate) unchanged at 14% in the January-July period of 2022. In the August-November period, the CBRT noted that geopolitical risks and uncertainties surrounding global growth had increased, and emphasized that financial conditions should remain supportive to preserve the growth momentum in industrial production and the positive trend in employment as well as to ensure the continuation of structural gains in supply and investment capacity. Accordingly, it reduced the policy rate by a total of 500 basis points from 14% to 9%. Considering the increasing risks regarding global demand, the CBRT judged that the current policy rate was adequate and decided to keep the policy rate constant at 9% in December 2022.
In 2022, the CBRT conducted an effective reserve management to strengthen international reserves. Reserve sources were diversified through new tools developed as part of the Liraization Strategy, and international reserves increased.
Under the Liraization Strategy, along with the interest rate policy, the CBRT made effective use of various tools and macroprudential measures concerning reserve requirements, securities maintenance, liquidity, collateral and international reserves management with a holistic approach in 2022. In this framework, a liraization-centered approach was adopted that would serve the price stability objective and also take into account risks to financial stability.
With a view to ensuring effective functioning of the FX market and supporting healthy price formation, the CBRT continued to monitor exchange rate developments and related risk factors closely as well as to take the necessary measures.

PLAIN, EFFECTIVE AND BILATERAL COMMUNICATION

As part of the Liraization Strategy, which sets out a comprehensive policy framework for the Turkish economy to achieve sustainable price stability and financial stability, the CBRT pursued a plain, transparent and bilateral communication policy in 2022.

In 2022, the decisions of the Monetary Policy Committee, Inflation Reports, Financial Stability Reports, Monthly Price Developments, the Monetary Policy and Liraization Strategy Text, actions related to macroprudential measures, and the statistics and analyses released by the CBRT were publicly announced through press releases and other communication channels as well as through social media posts.
Four Inflation Report Briefings were held in 2022 to carry out effective public communication of monetary policy.
Governor Şahap Kavcıoğlu delivered a presentation at the Grand National Assembly of Türkiye (GNAT) Plan and Budget Committee.
For the purpose of establishing a high level of coordination with all stakeholders to increase the effectiveness of monetary policy, Governor Şahap Kavcıoğlu attended several livestream programs and meetings of professional associations to share evaluations of economic developments and the CBRT’s policies and strategies.
The CBRT contributed to publicity campaigns for mechanisms that would support Turkish lira deposits as part of the Liraization Strategy.
The CBRT changed the name of the text released every year to explain the policies it will pursue to the Monetary Policy and Liraization Strategy in order to reflect its integrated policy framework. The Monetary Policy and Liraization Strategy for 2023 was shared with the public.
The CBRT staff continued to share their views on current economic issues with the public through new posts on the CBRT Blog. Governor Şahap Kavcıoğlu’s analysis of the “Liraization Strategy” was also published on the blog in 2022.
As part of its social media strategy, the CBRT continued to actively use social media through posts written in plain language and enriched with visual content.

MORE INTENSIVE AND EFFICIENT USE OF TECHNOLOGY AND FINANCIAL INFRASTRUCTURE

In the Information Technologies (IT) field, the CBRT continued its efforts to create the technological solutions and systems needed in line with its vision as well as to ensure the security and continuity of these systems.
Work was carried out to build the IT infrastructure of the CBRT premises in the Istanbul Financial Center.
The CBRT continued to transform its technology and application architecture to respond to its needs more quickly, to keep continuity high by increasing technical platform alternatives, and to enable end-to-end monitoring of the services provided.
To increase business continuity, the CBRT started to work on improving the infrastructure needed for the operability of its IT systems and applications in different data centers in addition to the existing ones, and the first tests were completed successfully.
Work was carried out to enhance our cyber security resilience, and data security measures were scaled up. Additionally, our cyber security monitoring infrastructure was refurbished with new capabilities.
Our intranet was renewed to enhance communication.
In the scope of the first-phase studies of the Digital Turkish Lira Project conducted under the leadership of the CBRT, the first payment transactions on the Digital Turkish Lira Network were executed successfully.
Infrastructure applications for the CBRT’s Liraization Strategy steps were made operational. In this scope, the IT infrastructure for FX-Protected Deposits (KKM), Deposit and Participation Scheme for Non-Resident Turkish Citizens (YUVAM), FX-Protected Deposit Account Converted from Physical Gold (FATSI) and Reserve Requirements projects was completed.
With the installation of nine new banknote processing systems (BPS) and the boosting of the speed of six BPS in 2022, the banknote processing capacity of our branches was increased by 18%. The continuous feed model was adopted in banknote processing operations, which led to a 10% average increase in banknote processing efficiency and a reduction in operational risks.
The UV-C LED banknote sterilization module developed by the CBRT engineers was registered as a “Utility Model” by the Turkish Patent and Trademark Office.
Notifications regarding banks’ cash withdrawal requests were included in the web-service infrastructure, thereby reinforcing the IT infrastructure in cash transactions.
Banknote demand was met in an uninterrupted manner and cash operations were executed smoothly. To meet the cash demand and the related operational needs, infrastructural improvements as well as operational and administrative regulations were made.
Six new Decentralized Cash Management (MONY) depots started operating, ensuring that the strategic and backup banknote depots were kept at sufficient levels and banknotes were circulated in a composition of high quality and clean banknote denominations.

COORDINATION WITH NATIONAL AND INTERNATIONAL STAKEHOLDERS

The CBRT continued to work in coordination and strengthen its relations with national and international stakeholders in matters that fall under its remit. In-person meetings, which could not take place for quite some time due to protective measures taken against the coronavirus pandemic, started to be held in 2022. Accordingly, the CBRT actively interacted with its stakeholders via organizing meetings, attending events and engaging in bilateral cooperation.

Meetings of the Financial Stability Board’s (FSB) Regional Consultative Group for the Middle East and North Africa (MENA), of which the co‑chairmanships were taken over by the CBRT and Central Bank of Tunisia for a two-year period starting from 1 July 2021, were held virtually on 14 June 2022 and 12 December 2022. The meetings were chaired at the Governor and Deputy Governor level.
The CBRT hosted the fourth meeting of the “OIC-COMCEC Central Banks Forum” under the Organization of Islamic Cooperation (OIC), of which it acts as the secretariat, on 25‑26 September 2022 in Istanbul. On the margins of the meeting, a workshop on “Best Practices on Promoting Financial Literacy and Islamic Finance in the OIC Member Countries” was held within the scope of “COMCEC Project Funding”. This workshop was organized by the Statistical, Economic and Social Research and Training Centre for Islamic Countries (SESRIC) under the project titled “Strengthening Financial Literacy and Promoting Islamic Finance in the OIC Member Countries” carried out in partnership with the CBRT, Bank Indonesia, and the Financial Services Authority of Indonesia.
The International Monetary Fund (IMF) delegation visited Türkiye in line with its mandate to monitor the economic and financial policies of member states and safeguard the international monetary system. In the scope of this visit, the CBRT delegation participated in Article IV meetings on 20-25 October 2022.
Co-chaired by Governor Şahap Kavcıoğlu and Pablo Hernández de Cos, Governor of the Banco de España, the Conference of Mediterranean Central Banks was held on 31 October 2022 in Istanbul under the theme of “Building Resilience in Uncertain Times: Safeguarding Financial Stability, Encouraging Investments”.
On 7 December 2022, the CBRT officials attended “Organization for Economic Co-operation and Development (OECD) - Economic and Development Review Committee (EDRC) Economic Surveys: Türkiye” held in the scope of studies for country review reports published for member states every two years.
The CBRT continued to take part in international meetings organized by the G20, the IMF and the Bank for International Settlements (BIS). The CBRT coordinated with domestic and international stakeholders, and duly participated in such meetings.
As a member of the Network for Greening the Financial System (NGFS) which is a collaboration network for the management of financial sector’s environment and climate change risks, the CBRT participated in working groups and subgroups.
The CBRT attended the Climate Council meeting held by the Ministry of Environment, Urbanization and Climate Change on 21-25 February 2022 in Konya, which set out roadmaps for different areas in the fight against climate change in line with Türkiye’s 2053 net zero emission and green development targets. In this scope, the CBRT took part in the Green Finance and Carbon Pricing Commission.
With a view to facilitating international trade in local currencies, encouraging investments, and supporting financial cooperation, a currency swap agreement was signed with the Central Bank of the United Arab Emirates on 19 January 2022, and the existing currency swap agreement with the People’s Bank of China was renewed on 6 June 2022.
To increase exchange of information in the field of central banking and strengthen networks of coordination between the CBRT and other central banks, memorandums of understanding were signed with the Central Bank of Venezuela and the Central Bank of Cuba on 8 June 2022 and 23 November 2022, respectively. Thus, the number of central banks with which the CBRT officially established cooperation reached 39.
A total of 64 videoconferences were held with 35 stakeholder central banks, and the CBRT hosted three study visits and paid one study visit to another central bank. These activities took place under an extensive geography of cooperation, in various areas of central banking - particularly in matters of priority on the global agenda of central banking, and on pre-determined issues concerning the enhancement of institutional capacities of the CBRT and other central banks with which it engages in bilateral cooperation. The CBRT also contributed to developing high-level bilateral dialogue through meetings with senior officials of other central banks and officials of the resident foreign missions in Türkiye.
As part of Türkiye’s accession to the European Union (EU), the CBRT continued to contribute to the work on alignment with the EU acquis on the issues that fall in its remit. Throughout the year, the Bank attended Economic and Financial Dialogue meetings, meetings of Economic Forecasts for Candidate Countries as well as the meeting of the Subcommittee No. 4 on Economic and Monetary Issues, Movement of Capital and Statistics organized to support the work on alignment with the EU acquis.

CORPORATE SOCIAL RESPONSIBILITY

In addition to fulfilling its main duties and responsibilities, the CBRT continued to engage in corporate social responsibility activities, and to support academic studies with donations and aids.

The CBRT continued to award scholarships to the graduates of Derince Anatolian High School to financially support it and encourage a higher level of school success. A graduation ceremony was held where successful students received awards.
As part of the Financial Support Program for Academic Studies, applications to the CBRT were evaluated and financial support was provided to specified programs.
With a view to expanding environment-friendly practices at the CBRT, the Bank carried out activities to contribute to reducing its carbon emission.
In the context of corporate social responsibility activities, the CBRT donated 1,148 items of fixtures (IT equipment as well as office, kitchen, health and security equipment) to 17 public institutions in 2022.
Following the earthquakes that hit the country, the CBRT donated TRY 30 billion to the “Türkiye Beats with One Heart” campaign.

INCREASING THE EFFECTIVENESS OF THE PAYMENTS AREA

The CBRT continued to take steps to foster financial infrastructure in order to establish payment and securities transfer and settlement systems, to ensure uninterrupted operation and supervision of the existing and future systems and make the related necessary arrangements, and to determine the methods and instruments to be used for payments, including the electronic environment.

The CBRT continued to carry out regulatory, infrastructural and promotional work to make the use of TR QR Code widespread.
The CBRT published the Merchant Registration System (MRS) Rules document on its website in June 2022. This document lays out the procedures and principles concerning the Merchant Registration System, along with the information and documents shared via this system, which was established by the Interbank Card Center (BKM) pursuant to Article 9, paragraph five of the Regulation on Payment Services and Electronic Money Issuance and Payment Service Providers published on the Official Gazette No. 31676 dated 1 December 2021, and stores and matches the business codes as well as the related information of businesses that provide goods and services through a payment method covered as a payment service.
The following documents were published in 2022: MRS Rules, Guide on the Stages of Operating License Applications of Payment and Electronic Money Institutions, Information Guide on the Obligation of Notification of Those Not Covered by Law pursuant to Article 12, paragraph two, subparagraphs (b) and (h) of the Law No. 6493, Guide on External Service Providers Offering Community Cloud Service to Payment and Electronic Money Institutions, and Communiqué on the Redetermination of Minimum Equity Amounts of Payment and Electronic Money Institutions. In addition, deadlines for harmonization with Payment Services regulations were extended, and the Gateway (GEÇİT) Infrastructure for Payment Services Data Sharing Services (PSDSS) was made operational.