Turkey is on the verge of ending a scheme protecting deposits from currency depreciation that is estimated to have cost $60 billion, another step toward abandoning unorthodox economic policies that triggered a lira crisis several years ago.
Turkish officials said the KKM scheme, introduced in late 2021, will be terminated by the end of 2025, though many bankers believe the exit could come even sooner.
The value of deposits covered by the scheme has shrunk from a peak of $140 billion to just $11.8 billion, a figure now seen as negligible in the context of Turkey’s $1.3 trillion economy.
The exit from KKM has progressed much faster than initial market expectations.
Under the scheme, individuals and businesses were able to deposit lira in special accounts that were protected against exchange rate losses.
The lira lost 44% of its value against the dollar in 2021, 29% in 2022, 37% in 2023, and 16% last year. (Reuters)