Monetary Policy of Central Bank of the Republic of Turkey after Global Financial Crisis

Basci, Erdem, Insight Turkey

The expansionary monetary policies, which were adopted by central banks of developed countries in the aftermath of the global financial turmoil with the aim of containing the impact of the global crisis, had significant implications for developing economies and Turkey was no exception. (1) During this period, the availability of ample and low-cost short-term foreign financing led to a rapid credit expansion and appreciation pressure on the Turkish lira. This brought the accumulation of macro-financial risks and rising external imbalances as of the second half of 2010. (2) As escalating risks pertaining to financial stability have the potential to hamper price stability over the medium term, different approaches for incorporating financial stability into the monetary policy framework started to be discussed in the academic literature and policy institutions. (3)

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The Central Bank Law, which was amended in 2001, gives responsibility the Bank with taking necessary measures to contribute financial stability alongside its primary mandate of achieving and maintaining price stability. Accordingly, in order to …

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Publication information: Article title: Monetary Policy of Central Bank of the Republic of Turkey after Global Financial Crisis. Contributors: Basci, Erdem - Author. Journal title: Insight Turkey. Volume: 14. Issue: 2 Publication date: Spring 2012. Page number: 23+. © 2008 SETA Foundation for Political, Economic, and Social Research. COPYRIGHT 2012 Gale Group.

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