Turkey Central Bank Unveils New Tool to Limit Bank Debt Risk
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Turkey’s central bank announced a new policy tool today to limit risks of excessive debt in the banking system by placing higher reserve requirements on banks that fail to meet specified leverage ratios.
The bank will begin relying on a new leverage ratio together with the capital adequacy ratio to guard against an expansion in debt, central bank Governor Erdem Basci said at a press conference in Ankara today. The measure will require banks with leverage levels below 3.5 percent to hold additional reserve requirements that will increase as the leverage ratio decreases.