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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MonetarySystem & Policy
Reflecting the developments of the real part
Financial markets &
PrimaryFunctions of Money
Kaynak: The Development of Central Banking, Nisan 1994, BOE
August 1989- Turning Point
of Liberalisation Movement:
Opening up foreign capital
accounts fully and
making the TL convertible.
Budget financing from CB gradually
Public Sector started to sell
bonds and notes to have revenues.
Borrowing from both domestic & foreign
sources become a dominant trend.
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.
For the regulation of money supply there are four primary tools that
are used by the CB:
YabancıPara( USD $ or Euro)
is a specialtype of interestthat CB chargeswhenlendingmoneytobanks.
Rediscounting is done by,
Setting an upper limit
Changing of interestcharged in general orforsomespecific
Specifyingthetype of papersthatwill be accepted.
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
DBNS is abbreviated from domestic borrowing notes of state.
The CB decides
Withwhat is calledTheLate Liquid Windowthe rate of
Borrowingandlending in Interbank Money Marketsforonenight
The rate of borrowingpossibilitieseitherforonenightoroneweekforthe OMO.
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
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
Tablo 3. 2001-2003 Dönemi TCMB Bilanço Gelişmeleri(Trilyon TL)
Tablo 4. Main Monetary Indicators, 2005-2010. Gelişmeleri(Trilyon TL)
Theprimaryfuntion of thebankingsystem is to
Bankscollects as manyassets as possibleandlendthem
totheircustomerswith an interest rate.
During the 1970s:
It was the high inflation years.The Gap btw interest rate & inflation widened 25-30 points.
Until end of Second
Banks are publicly owned:
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
Dominant banking activity
was financing production
and growth process for
Slides prepared by Kamer Olkay Aşık, DEU Faculty of Business, Student of Practical Training Class under guidance of Prof. Sedef Akgüngör