Governor Fatih Karahan told a parliamentary commission that September fund defaults should have a limited effect on the real economy and have not spread through the wider financial system.
Central bank governor Fatih Karahan said the fallout from September market turmoil, set off by defaults at some investment funds, should stay limited for the real economy and has not affected the broader financial system. He spoke at parliament's Planning and Budget Commission in Ankara.
Initial central-bank analysis found that real-sector companies held only a limited share of the funds being liquidated, and that most of those firms were large and liquid, he said. Even if some balance sheets are hit, he expected the effect on the real economy to be more limited, and said the bank would keep watching.
The bank raised banks' borrowing limits tenfold and cut the discount rates on inflation-indexed securities and foreign-currency collateral used by banks to 10 percent, the report said. It also lowered the share of lira required reserves that must stay blocked, which Karahan called more flexibility for liquidity management.
The Capital Markets Board ordered the liquidation of 131 funds run by seven portfolio companies, affecting 455,758 individual investors and more than 19 billion dollars in assets at the time. Authorities have arrested 85 of 217 suspects in a probe into suspected manipulation of 26 Borsa Istanbul stocks.
The governor's comments are an official assessment of contained impact, not a final loss figure for investors.
People Sentiments Negative
- Karahan said any effect on the real economy should be more limited.