In order to increase the share of Turkish lira in the total deposit and participation funds in the banking system, “Communique on Supporting the Conversion to Turkish Lira Deposit and Participation” Funds" “Türk Lirası Mevduat ve Katılma Hesaplarına Dönüşümün Desteklenmesi Hakkında Tebliğ” (“Communiqué”) is published by The Central Bank of Republic of Turkey(CBRT) on 21.12.2021. With this communiqué, some arrangements are made in order to convert the savings in gold and foreign currency deposits into Turkish Lira (TL) with exchange rate protection. In the first place, the scope of the regulation was limited to real persons only. This scope has been expanded to include also legal entities registered in Turkey by the Communique numbered 2022/1 published in the Official Gazette dated 11.01.2022. As a result of the CBRT regulations, savings of real persons and legal entities in US Dollar, Euro and British Pound accounts, which are available on the dates noted in the regulation, will be able to be converted into TL protected accounts. Yet, CBRT's regulation only concerns for supporting the conversion of the foreign currency.
On the other hand, Ministry of Treasury and Finance (Ministry) released a press which is issued regarding the principles of practice for currency protected TL deposit and participation accounts on 24.12.2021. In this statement, the Ministry introduced a different understanding from the aim and scope of the communique presented by CBRT. In the press release of the Ministry, only real persons residing in Turkeyis considered to be eligible for enjoying the protection against currency fluctuation for TL deposit and participation accounts. However, there is no information that legal entities can benefit from currency protection for their funds in TL. From this statement of the Ministry, it is understood that it is possible for real persons to benefit from exchange rate protection for their savings in TL,but not legal entities. At least until the two authorities announce a common understanding.
Notes from CBRT Regulation;
- "The Communiqué” ispublished on 21.12.2021.
- In this Communiqué, only covers Turkish citizens working abroad, self-employed and sole business owners and real persons officially residing in Turkey.
- With Communiqué numbered 2022/1 published in the Official Gazette dated 11.01.2022, the scope of this application has been expanded to include legal entities registered in Turkey.
- In accordance with the current version of the Communiqué, real persons having foreign currency deposit accounts as of 21.12.2021 and legal entities as of 31.12.2021 can benefit from foreign exchange protection.
- "Implementation Instruction" was published by CBRT on 31.12.2021 in order to prevent some confusion regarding the "currency protected account" product, which was newly introduced in the banking system. This instruction consists of detailed explanations regarding the implementation of the regulation of communiqué.
- In any case, in accordance with CBRT's explanations on the subject, "currency protected account" can only be opened by converting gold and foreign currency accounts (only USD, Euro and GBP) into TL accounts with conversion support.
Notes from the Announcement of Ministry of Treasury and Finance;
- “Press Statement on Implementation Principles Regarding Currency Protected TL Deposit and Participation Accounts” was made on 24.12.2021.
- In the press release of the Ministry, only real persons residing in Turkey is considered to be eligible for enjoying the protection against currency fluctuation for TL deposit and participation accounts. However, there is no information that legal entities can benefit from currency protection for their funds in TL.
- On the other hand, in the statement of the Ministry, there is no requirement for conversion from foreign currency accounts in order to open a currency protected account.
- Althoughit is clearly stated in the CBRT's communiqués and implementation principles that "foreign currency deposit accounts in US Dollars, Euros and British Pounds and foreign exchange denominated participation fund balances" can benefit from exchange rate protection, no such prerequisite is mentioned in the Ministry statement. It can be interpreted that the savings in TL can be used in the accounts to be opened with currency protection. Yet, there is no direct regulation of competent authority on the subject.
In summary, there is a serious confusion in practice due to the differences in the statements of the CBRT and the Ministry of Treasury and Finance on the currency protected TL account. For this reason, it is recommended that real persons and legal entities who want to take advantage of the currency-protected TL account should contact their banks.
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