Strengthening Reserves of the Central Bank of the Republic of Turkey (CBRT): An Examination for Transferring Treasury’s Share in Profit to Reserves and Increasing Treasury’s Share in CBRT

Abstract

The study is prepared to strengthen reserves of CBRT. For this purpose, a set of proposals, consisting of transferring Treasury’s share in profit to reserves and increasing Treasury’s share in CBRT, is developed. Effects of the proposals are analyzed by using data, which are gathered from electronic data distribution system and web site of CBRT, for the period of 2000-2018. According to analysis results, total additional reserves of USD 29.7 billion would be accumulated by applying the first proposal for the period. When taking into consideration that CBRT's net reserves is USD 30.2 billion as of 2019 March end, it turns out how effective this recommendation is. In addition to the first proposal, much more reserves would be accumulated faster by adopting the proposal with the increasing Treasury’s share in CBRT which is equal 55% currently. With the implementation of this proposal, the accumulation of reserves would reach to USD 45.8 billion for the period of 2000-2018. While CBRT reserves show a significant decline nowadays, the implementation of the proposals recommended in the study will contribute significantly to increase in CBRT reserves.

Keywords: CBRT, Net Profit, Reserves, Treasury Share, Turkey

JEL Classification: E59, G21, G28, H25, K23, N15, O23