Boosting reserves main policy of Turkish Central Bank

By Gokhan Ergocun and Tuba Sahin

ISTANBUL/ANKARA (AA) – Main policy of Turkey’s Central Bank is to keep the bank reserves strong and further reinforce them, governor of the bank said on Monday.

In an exclusive interview with Anadolu Agency, Murat Cetinkaya, the governor of Central Bank of the Republic of Turkey (CBRT), evaluated recent developments in Turkish economy, and the bank's monetary policy, as well as the 41st Governors’ Club, which is hosted by the CBRT on Monday.

He stressed the meeting — gathering the central bank governor’s member states — would discuss issues of global economy.

Anadolu Agency (AA): Today, you, as the Central Bank of the Republic of Turkey (CBRT), are hosting an important international meeting in Istanbul. What type of a platform is the Governors’ Club? What is the CBRT’s role in it?

Cetinkaya: The Governors’ Club was established in 1998 with the initiative of our bank to strengthen relationships and enhance technical cooperation among the central banks of Central Asia, Black Sea Region and Balkan countries. The Club is a major platform on which central banks assess global and regional economic developments, exchange experiences and negotiate cooperation opportunities. Our Bank is in charge of the duties of the Club’s secretariat. The Governors’ Club currently has 26 members.

AA: What are the main themes of today’s meetings? Which topics are going to be discussed?

Cetinkaya: Senior-level participation, mostly the central bank governors, is expected for today’s meeting. At the meeting, the governors of the member country central banks will discuss the global economic and financial outlook, issues in the governance of central banks and communication tools used to enhance policy effectiveness. Additionally, academics and representatives from international organizations will also contribute to the meeting with their speeches and presentations.

– ‘Strong improvement observed in current account balance’

AA: Lastly, there were some movements in financial markets last week. We also witnessed issues being discussed regarding the Central Bank reserves. How do you evaluate these developments?

Cetinkaya: We have shared our evaluations about market developments through a press release we announced today. First of all, I would like to say that the rebalancing process in economic activity continues. Leading indicators suggest that there has been a moderate recovery in domestic demand in the first quarter. We also observe a strong improvement trend in the current account balance. The Central Bank continues to use all available instruments to achieve price stability and support financial stability. We are shaping our monetary policy stance with a focus on bringing inflation down to single digits in the shortest time possible.

Regarding the reserves, I would like to emphasize that our main policy is to keep our reserves strong and further reinforce them. Last year, there was some decline in reserves following the financial market volatilities. However, we have witnessed an uptrend since then. We aim to sustain this trend in a robust manner. Our stance is clear in this regard. It is normal to observe fluctuations in gross reserves from time to time. This is not an extraordinary case. For sounder analyses, reserve developments should be monitored in light of medium-term trends.