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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

Year 2020, , 15 - 29, 25.04.2020
https://doi.org/10.38009/ekimad.656244

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.

References

  • Acemoğlu, D. and Robinson, J. A. (2018). Why Nations Fail: The Origin of Power, Prosperity and Poverty.
  • Aizenman, J., Cheung, Y. W. and Ito, H. (2015). International Reserves Before and After The Global Crisis: Is There No End To Hoarding? Journal of International Money and Finance, 52, 102-126.
  • Aizenman, J., Lee, Y. and & Rhee, Y. (2007). International Reserves Management and Capital Mobility in a Volatile World: Policy Considerations and a Case Study of Korea. Journal of the Japanese and International Economies, 21(1), 1-15.
  • Aizenman, J. & Marion., N. (2003). The High Demand for International Reserves in the Far East: What is Going on? Journal of the Japanese and international Economies, 17(3), 370-400.
  • Benecká, S. & Komarek, L. (2018). International Reserves: Facing Model Uncertainty. Economic Systems, 42(3), 523-531.
  • CBRT. (2018). Independent Audit Reports, https://www.tcmb.gov.tr/wps/wcm/connect/EN/TCMB+EN/Main+Menu/About+The+Bank/Organization/Independent+Audit+Reports, 01.05.2019.
  • CBRT. (2019a). EVDS (Data Central), https://evds2.tcmb.gov.tr/index.php?/evds/serieMarket, 01.05.2019.
  • CBRT. (2019b). Article of Association, https://www.tcmb.gov.tr/wps/wcm/connect/TR/TCMB+TR/Main+Menu/Banka+Hakkinda/Mevzuat/TCMB+Esas+Mukavelesi, 05.05.2019.
  • CBL. (1970). Central Bank Law numbered 1211. Published in Official Gazette dated 01.26.1970 and numbered 13409.
  • Cinel, E. A. & Yamak, N. (2014). Determinants of the Central Bank Foreign Currency Reserves: The Case of Turkey. Economic Approach, 25(93), 21-38.
  • Eğilmez, M. (2017). Central Bank Reserves, http://www.mahfiegilmez.com/2017/04/merkez-bankas-rezervleri.html, 03.10.2018.
  • Eren, B. (2017). Factors Affecting the Rezerv Request Required Countries And Reserve Authority. Proficiency Thesis of CBRT, http://www.tcmb.gov.tr/wps/wcm/connect/4da1ac52-bbb4-4cef-a37b-84a1b14a026a/Bekir+Uzmanl%C4%B1k+Tezi-23.10.2017.pdf?MOD=AJPERES&CACHEID=ROOTWORKSPACE-4da1ac52-bbb4-4cef-a37b-84a1b14a026a-m3fBagm, 07.05.2019.
  • Cinel, E. A. & Yamak, N. (2014). Determinants of the Central Bank Foreign Currency Reserves: The Case of Turkey. Economic Approach, 25(93), 21-38.
  • Fukuda, S. I. & Kon, Y. (2012). Macroeconomic Impacts of Foreign Exchange Reserve Accumulation: Theory and International Evidence. In: Kawai, M., Morgan, P.J., Takagi, S. (Eds.), Monetary and Currency Policy Management in Asia. Edward Elgar Publishing.
  • Ghosh, A. (2016). What Drives Gold Demand in Central Bank's Foreign Exchange Reserve Portfolio? Finance Research Letters, 17, 146-150.
  • Jo, G. J. (2011). Analysis of International Reserve Hoarding in Korea. Pacific Economic Review, 16(2), 154-167.
  • Kartal, M. T. (2018). New Player to Turkish Financial Markets: Turkey Product Specialized Exchange’s Role and Potential Contributions. 5. International Social, Human and Economic Sciences Symposium, 25.10.2018, Abstract Book, 209-210.
  • Kasman, A & Ayhan, D. (2008). Foreign Exchange Reserves and Exchange Rates in Turkey: Structural Breaks, Unit Roots and Cointegration. Economic Modelling, 25(1), 83-92.
  • Mahraddika, W. (2019). Does International Reserve Accumulation Crowd out Domestic Private Investment? International Economics, https://doi.org/10.1016/j.inteco.2019.02.003.
  • Minjie, M. and Degong, M. (2016). The Effect of Export Rebate on RMB Exchange Rate and Foreign Exchange Reserves-Based on the Data from 1996 to 2014. Journal of Sichuan University (Philosophy and Social Science Edition), 1(9).
  • Oktay, B, Öztunç, H. & Serin, Z. V. (2016). Determinants of Gold Reserves: An Empirical Analysis for G-7 Countries. Procedia Economics and Finance, 38, 8-16.
  • Pina, G. (2017). International Reserves and Global Interest Rates. Journal of International Money and Finance, 74, 371-385.
  • Qian, X. & Steiner, A. (2014). International Reserves and the Composition of Foreign Equity Investment. Review of International Economics, 22(2), 379-409.
  • Reinhart, C. M., Reinhart, V. and & Tashiro, T. (2016). Does Reserve Accumulation Crowd out Investment? Journal of International Money and Finance, 63, 89-111.
  • Romero, A. M.. (2005). Comparative Study: Factors that Affect Foreign Currency Reserves in China and India. Honors Projects, Economics Department, Illinois Wesleyan University, United States.
  • Schröder, M. (2017). Mercantilism and China's Hunger for International Reserves. China Economic Review, 42, 15-33.
  • Sula, O. (2011). Demand for International Reserves in Developing Nations: A Quantile Regression Approach. Journal of International Money and Finance, 30(5), 764-777.
  • TSI. (2019). Main Statistics, http://www.turkstat.gov.tr/UstMenu.do?metod=temelist, 01.05.2019.
  • Worldbank. (2019). GDP, https://data.worldbank.org/indicator/ny.gdp.mktp.cd?view=map, 01.05.2019.
  • Yüksel, S. and Özsarı, M. (2017). Identifying Macroeconomic Factors Influencing the Foreign Exchange Reserves of the Central Bank of Turkey. Finance, Politic and Economic Comments, 54(631), 41-53.

Türkiye Cumhuriyet Merkez Bankası (TCMB) Rezervlerinin Güçlendirilmesi: Kardaki Hazine Payının Rezervlere Aktarılması ve TCMB’deki Hazine Payının Artırılmasına Yönelik Bir İnceleme

Year 2020, , 15 - 29, 25.04.2020
https://doi.org/10.38009/ekimad.656244

Abstract

Bu çalışma, TCMB rezervlerinin güçlendirilmesine yönelik hazırlanmıştır. Bu amaca yönelik olarak, kardaki Hazine payının rezervlere aktarılması ve TCMB’deki Hazine’ye ait ortaklık payının artırılmasından oluşan bir öneri seti geliştirilmiştir. Söz konusu önerilerin etkileri TCMB’nin elektronik veri dağıtım sisteminden ve web sitesinden alınan 2000-2018 dönemine ilişkin veriler kullanılarak analiz edilmiştir. Analiz sonuçlarına göre, ilk önerinin uygulanması ile birlikte söz konusu dönemde 29,7 milyar ABD Doları rezerv birikimi sağlanabilirdi. 2019 Mart sonu itibariyle TCMB net rezervlerinin 30,2 milyar ABD Doları olduğu dikkate alındığında, geliştirilen önerinin ne kadar etkili olduğu görülmektedir. Birinci öneriye ek olarak mevcut durumda %55 olan TCMB’deki Hazine ortaklık payının artırılması şeklindeki ikinci önerinin uygulanmasıyla daha hızlı rezerv birikimi sağlanabilecektir. Bu önerinin uygulanmasıyla birlikte 2000-2018 dönemi için biriktirilebilecek rezerv tutarı 45,8 milyar ABD Doları olarak hesaplanmaktadır. Günümüzde TCMB rezervleri önemli miktarda düşüş gösterirken, bu çalışmada sunulan önerilerin uygulanması TCMB rezervlerinin artırılmasına önemli miktarda katkı sağlayacaktır.

References

  • Acemoğlu, D. and Robinson, J. A. (2018). Why Nations Fail: The Origin of Power, Prosperity and Poverty.
  • Aizenman, J., Cheung, Y. W. and Ito, H. (2015). International Reserves Before and After The Global Crisis: Is There No End To Hoarding? Journal of International Money and Finance, 52, 102-126.
  • Aizenman, J., Lee, Y. and & Rhee, Y. (2007). International Reserves Management and Capital Mobility in a Volatile World: Policy Considerations and a Case Study of Korea. Journal of the Japanese and International Economies, 21(1), 1-15.
  • Aizenman, J. & Marion., N. (2003). The High Demand for International Reserves in the Far East: What is Going on? Journal of the Japanese and international Economies, 17(3), 370-400.
  • Benecká, S. & Komarek, L. (2018). International Reserves: Facing Model Uncertainty. Economic Systems, 42(3), 523-531.
  • CBRT. (2018). Independent Audit Reports, https://www.tcmb.gov.tr/wps/wcm/connect/EN/TCMB+EN/Main+Menu/About+The+Bank/Organization/Independent+Audit+Reports, 01.05.2019.
  • CBRT. (2019a). EVDS (Data Central), https://evds2.tcmb.gov.tr/index.php?/evds/serieMarket, 01.05.2019.
  • CBRT. (2019b). Article of Association, https://www.tcmb.gov.tr/wps/wcm/connect/TR/TCMB+TR/Main+Menu/Banka+Hakkinda/Mevzuat/TCMB+Esas+Mukavelesi, 05.05.2019.
  • CBL. (1970). Central Bank Law numbered 1211. Published in Official Gazette dated 01.26.1970 and numbered 13409.
  • Cinel, E. A. & Yamak, N. (2014). Determinants of the Central Bank Foreign Currency Reserves: The Case of Turkey. Economic Approach, 25(93), 21-38.
  • Eğilmez, M. (2017). Central Bank Reserves, http://www.mahfiegilmez.com/2017/04/merkez-bankas-rezervleri.html, 03.10.2018.
  • Eren, B. (2017). Factors Affecting the Rezerv Request Required Countries And Reserve Authority. Proficiency Thesis of CBRT, http://www.tcmb.gov.tr/wps/wcm/connect/4da1ac52-bbb4-4cef-a37b-84a1b14a026a/Bekir+Uzmanl%C4%B1k+Tezi-23.10.2017.pdf?MOD=AJPERES&CACHEID=ROOTWORKSPACE-4da1ac52-bbb4-4cef-a37b-84a1b14a026a-m3fBagm, 07.05.2019.
  • Cinel, E. A. & Yamak, N. (2014). Determinants of the Central Bank Foreign Currency Reserves: The Case of Turkey. Economic Approach, 25(93), 21-38.
  • Fukuda, S. I. & Kon, Y. (2012). Macroeconomic Impacts of Foreign Exchange Reserve Accumulation: Theory and International Evidence. In: Kawai, M., Morgan, P.J., Takagi, S. (Eds.), Monetary and Currency Policy Management in Asia. Edward Elgar Publishing.
  • Ghosh, A. (2016). What Drives Gold Demand in Central Bank's Foreign Exchange Reserve Portfolio? Finance Research Letters, 17, 146-150.
  • Jo, G. J. (2011). Analysis of International Reserve Hoarding in Korea. Pacific Economic Review, 16(2), 154-167.
  • Kartal, M. T. (2018). New Player to Turkish Financial Markets: Turkey Product Specialized Exchange’s Role and Potential Contributions. 5. International Social, Human and Economic Sciences Symposium, 25.10.2018, Abstract Book, 209-210.
  • Kasman, A & Ayhan, D. (2008). Foreign Exchange Reserves and Exchange Rates in Turkey: Structural Breaks, Unit Roots and Cointegration. Economic Modelling, 25(1), 83-92.
  • Mahraddika, W. (2019). Does International Reserve Accumulation Crowd out Domestic Private Investment? International Economics, https://doi.org/10.1016/j.inteco.2019.02.003.
  • Minjie, M. and Degong, M. (2016). The Effect of Export Rebate on RMB Exchange Rate and Foreign Exchange Reserves-Based on the Data from 1996 to 2014. Journal of Sichuan University (Philosophy and Social Science Edition), 1(9).
  • Oktay, B, Öztunç, H. & Serin, Z. V. (2016). Determinants of Gold Reserves: An Empirical Analysis for G-7 Countries. Procedia Economics and Finance, 38, 8-16.
  • Pina, G. (2017). International Reserves and Global Interest Rates. Journal of International Money and Finance, 74, 371-385.
  • Qian, X. & Steiner, A. (2014). International Reserves and the Composition of Foreign Equity Investment. Review of International Economics, 22(2), 379-409.
  • Reinhart, C. M., Reinhart, V. and & Tashiro, T. (2016). Does Reserve Accumulation Crowd out Investment? Journal of International Money and Finance, 63, 89-111.
  • Romero, A. M.. (2005). Comparative Study: Factors that Affect Foreign Currency Reserves in China and India. Honors Projects, Economics Department, Illinois Wesleyan University, United States.
  • Schröder, M. (2017). Mercantilism and China's Hunger for International Reserves. China Economic Review, 42, 15-33.
  • Sula, O. (2011). Demand for International Reserves in Developing Nations: A Quantile Regression Approach. Journal of International Money and Finance, 30(5), 764-777.
  • TSI. (2019). Main Statistics, http://www.turkstat.gov.tr/UstMenu.do?metod=temelist, 01.05.2019.
  • Worldbank. (2019). GDP, https://data.worldbank.org/indicator/ny.gdp.mktp.cd?view=map, 01.05.2019.
  • Yüksel, S. and Özsarı, M. (2017). Identifying Macroeconomic Factors Influencing the Foreign Exchange Reserves of the Central Bank of Turkey. Finance, Politic and Economic Comments, 54(631), 41-53.
There are 30 citations in total.

Details

Primary Language English
Subjects Business Administration
Journal Section Articles
Authors

Mustafa Tevfik Kartal 0000-0001-8038-8241

Publication Date April 25, 2020
Submission Date December 6, 2019
Published in Issue Year 2020

Cite

APA Kartal, M. T. (2020). 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. Ekonomi İşletme Ve Maliye Araştırmaları Dergisi, 2(1), 15-29. https://doi.org/10.38009/ekimad.656244