The Central Bank of the Republic of Turkey (CBRT) (Türkiye Cumhuriyet Merkez Bankası - "TCMB") is the central bank of Turkey and is founded as a joint stock company with the exclusive right to issue banknotes in Turkey. The preparations to establish a central bank began in 1926, but organization was established on October 3, 1931 and opened officially on January 1, 1932. The Bank had, originally, a privilege of issuing banknotes for a period of 30 years. In 1955, this privilege was extended until 1999. Finally it was prolonged indefinitely in 1994.
History of Central Banking in Turkey
Until the 1856 Ottoman Empire
, the Treasury operations, money and credit transactions and the trade in gold and foreign currencies were executed in varying degrees by the Treasury, the Mint, jewelers, money lenders, foundations and guilds. In 1847 the Ottoman Government allowed Galata
Bankers to set up the Bank of Dersaadet as a bank which assumed the external payments of the Ottoman Empire for the first time.
In 1856, the Ottoman Bank
was established jointly with French and English capital. The bank functions as a clearing house for Ottoman Public Debt Administration
, which The interest and principal payments regarding domestic and foreign debts would be made by the Ottoman Bank only. In 1863 partly assumed the functions of contemporary central banking after becoming a state bank under the name of "Imperial Ottoman Bank". The Imperial Ottoman Bank enjoyed the right and monopoly of issuing banknotes
. The Government relinquished the right to issue banknote within the period of privilege and to grant permission to other institutions in this regard as well. Equipped with this power, the Bank would act as the Treasurer of the State, collect the State revenues, perform the payments of the Treasury and discount Treasury bills as well.
Republic of Turkey
After establishment of Republic of Turkey
in 1923, the administration extended the period of privilege of the Ottoman Bank acting as a central bank until 1932. Ottoman Bank was replaced by Central Bank of the Republic of Turkey. Ottoman Bank returned to its normal banking functions.
Responsibilities of Central bank
CBRT’s current powers and duties are defined by a specific law (CBRT law) accepted on January 14
The Law on the Central Bank of the Republic of Turkey, No. 1715 was enacted on June 11, 1930. According to the Law No. 1715, the basic aim of the Bank was to support economic development of the country. In order to fulfill this aim, the Bank was given the following duties:
- To set rediscount ratios and to regulate money markets,
- To execute Treasury operations,
- To take, jointly with the Government, all measures to protect the value of Turkish currency.
With the introduction of economic development plans in Turkey in the 1960s, several changes were made in the Central Bank Law. For the same purpose, the Law No. 1211, which was enacted on January 26, 1970, redefined the duties and responsibilities of the Central Bank of the Republic of Turkey, so as to implement the money and credit policy within the framework of development plans.
In the second half of the 1980s, the Bank inaugurated interbank money market, foreign exchange money market and started to make use of open market operations.
Duties and Powers
"The primary objective of the Bank shall be to achieve and maintain price stability. The Bank shall determine on its own discretion the monetary policy that it shall implement and the monetary policy instruments that it is going to use in order to achieve and maintain price stability.”
Fundamental duties of the Bank are as follows:
- to carry out open market operations
- to protect the value of Turkish Lira and to establish the exchange rate policy
- to determine the reserve requirements and liquidity requirement
- to manage the gold and FX reserves of the country
- to regulate the volume and circulation of Turkish Lira
- to ensure stability in the financial system and monitor the financial markets
Fundamental powers of the Bank shall be:
- The exclusive right to issue banknotes in Turkey
- The right to determine of the inflation target together and implementation of monetary policy
- The privilege to grant advance to the Savings Deposits Insurance Fund
- The role of the lender of last resort
- The power to request necessary information from financial institutions
Board of directors
The Board of Directors is composed of the Governor, who is the chairman of the Board, and six members elected by the general assembly.
M.Vehbi Çıtak, Dr. Lokman Gündüz, Prof. Dr. M. İlker Parasız, Necati Şahin, Dr. M. İbrahim Turhan