Turkey Winds Down Forced Government Bond-Buying for Banks
- Rules had largely killed foreign interest in local bond market
- Central bank is stepping up efforts to return to orthodoxy
A new team under Governor Hafize Gaye Erkan has promised to simplify the rules.
Source: Greystone via Global Newswire
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Turkey scrapped rules forcing banks to buy government bonds as a penalty for lending at interest rates above certain limits or falling short of targets for business loans, ending a practice widely reviled by local lenders and foreign investors.
The central bank said in a statement that it was abolishing the rules as part of its “simplification” of regulation and in order to strengthen its fight against dollarization in the economy.