ISTANBUL, December 18 (Reuters) – Turkish Finance Minister Nureddin Nebati briefed the country’s banking association, banking watchdog BDDK and directors of state banks about the government’s new low-rate business model , the association announced on Saturday, after the pound fell to record low.

The lira fell above 17 per US dollar on Friday after fears of an inflationary spiral mounted, prompted by President Tayyip Erdogan’s policies on soaring prices. Read more

In a statement, the banking association said the purpose of the meeting was to discuss “healthy and consistent growth,” adding that developments in the banking sector, as well as in the domestic and global economy, had been evaluated.

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“Our banks will continue to use their resources to meet the financial needs of households and the real economy, under the free market mechanism that works with its rules,” he said.

Despite criticism from opposition economists and lawmakers, Erdogan insisted that monetary easing boost credit, exports and growth ahead of the 2023 election, causing the lira to lose 55% of its value against the lira. dollar this year, of which nearly 40% in the last month alone.

The sharp depreciation has caused the sterling value of foreign currency loans to skyrocket, putting pressure on banks’ capital adequacy ratios (CARs), which are measured in local currency.

Reuters reported on Friday that Turkish authorities were working on possible relief measures for banks caught between the currency crash and capital requirements, including a possible capital injection for state banks. Read more

Earlier on Saturday, Turkey’s largest business group, TUSIAD, called on the government to abandon the current monetary policy, calling for a return to “the rules of economics”. Read more

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Report by Ebru Tuncay; Writing by Tuvan Gumrukcu; Editing by Timothy Heritage and David Holmes

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