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III. Financial World I: Money & Banking. Monetary System & Policy. 1. Introduction. Reflecting the developments of the real part. 2. Managing Money a. Remembering the Basics. The Development Of Capitalism. Liberalization of Financial markets & Globalization. Establishment of

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Iii financial world i money banking

III. Financial World I:Money & Banking

MonetarySystem & Policy


1 introduction
1. Introduction

Reflecting the developments of the real part


2 managing money a remembering the basics
2. Managing Moneya. Rememberingthe Basics

The Development

Of Capitalism

Liberalization of

Financial markets &

Globalization

Establishment of

Central Banks


PrimaryFunctions of Money

Money neededforthreepurposes

  • Medium of exchange

  • Unit of account

  • Store of wealth

  • Transactions

  • Speculative

  • Precautionary


The developments of cb in the world
TheDevelopments of CB in The World

Kaynak: The Development of Central Banking, Nisan 1994, BOE


B historical background of tcmb
b. Historical Background of TCMB

August 1989- Turning Point

of Liberalisation Movement:

Opening up foreign capital

accounts fully and

making the TL convertible.

After 1980:

Budget financing from CB gradually

eliminated.

Public Sector started to sell

bonds and notes to have revenues.

Borrowing from both domestic & foreign

sources become a dominant trend.


C restructuring of institutional framework a digression

c. Restructuring of Institutional Framework. A Digression:

The Changing Role of The CB

The primary function of the CB is, by managing the monetary variables both

domestic and foreign , to accomplish price stability which in practise means

achieving a targeted rate of inflation every year.


D tools of monetary policy
d. Tools of MonetaryPolicy

For the regulation of money supply there are four primary tools that

are used by the CB:


Required reserve ratio t rk liras disponibilite current rates
RequiredReserveRatio(%)Türk Lirası Disponibilite( currentrates)

YabancıPara( USD $ or Euro)

Kaynak: TCMB


Rrr to hold cash or near cash values according to their deposit liabilities
RRR(%)To hold cash or near cash values according to their deposit liabilities


The rediscount
TheRediscount

is a specialtype of interestthat CB chargeswhenlendingmoneytobanks.

Rediscounting is done by,

Setting an upper limit

Changing of interestcharged in general orforsomespecific

sectors

Specifyingthetype of papersthatwill be accepted.


Open market operation
Open Market Operation

REPO is a repurchasing agreement whereby valuable papers

are sold with a specific price and are bought back at the end

of a specific time, and the seller gets his money back with interest.

If REPO agreement made with foreign currencies, which is called

a swap.

DBNS is abbreviated from domestic borrowing notes of state.


Interest rate
Interest Rate

The CB decides

Theovernightborrowingandlendingratesforinterbankdealings.

Withwhat is calledTheLate Liquid Windowthe rate of

Borrowingandlending in Interbank Money Marketsforonenight

The rate of borrowingpossibilitieseitherforonenightoroneweekforthe OMO.


Overnight(O/N)

Tarih Borç Alma Borç Verme

20.02.02 57.00 62.00

25.04.03 41.00 48.00

05.02.04 24.00 29.00

11.01.05 17.00 21.00

02.01.06 13.50 16.50

14.09.07 17.25 22.25

18.01.08 15.50 19.50

17.06.09 8.75 11.25

17.07.09 8.25 10.75

19.08.09 7.75 10.25

17.09.10 6.25 8.75

05.08.11 5.00 9.00

21.10.11 5.00 12.50

22.02.12 5.00 11.50

19.09.12 5.00 10.00

19.10.12 5.00 9.50

21.11.12 5.00 9.00

Kaynak: TCMB


The late liquid window
The Late Liquid Window

Tarih Borç Alma Borç Verme

20.02.02 5.00 62.00

15.10.03 5.00 36.00

20.12.04 5.00 26.00

09.12.05 5.00 21.50

21.07.06 13.50 25.50

14.12.07 11.75 23.00

19.12.08 11.00 20.50

20.11.09 2.50 12.00

17.12.10 0.00 12.00

21.10.11 0.00 15.50

22.02.12 0.00 14.50

19.09.12 0.00 13.00

19.10.12 0.00 12.50

21.11.12 0.00 12.00

Kaynak: TCMB





B the banking system

B. The Banking System Gelişmeleri(Trilyon TL)

Basics

Theprimaryfuntion of thebankingsystem is to

facilitatemoneyandcreditmarkets.

Bankscollects as manyassets as possibleandlendthem

totheircustomerswith an interest rate.


2 a brief historical background
2. A Brief Historical Background Gelişmeleri(Trilyon TL)

During the 1970s:

It was the high inflation years.The Gap btw interest rate & inflation widened 25-30 points.

Until end of Second

World War:

Banks are publicly owned:

Sümerbank,Etibank.

End of the 1970s:

A new warket created openly

outside the banking system

called bankers or money

brokers. But this practice was

halted partly by administrative

measures.

Until 1980s

Dominant banking activity

was financing production

and growth process for

industralisation policy.


Kaynak: BDDK Gelişmeleri(Trilyon TL)


Kaynak: BDDK Gelişmeleri(Trilyon TL)


Slides prepared by Kamer Olkay Aşık, DEU Faculty of Business, Student of Practical Training Class under guidance of Prof. Sedef Akgüngör


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