1 / 25

Dollarization and Monetary Transmission in Turkey

Dollarization and Monetary Transmission in Turkey Erdem BAŞÇI Vice Governor Central Bank of Turkey. Asset Dollarization. Share of FX-Denominated Deposits in Total Deposits. Monetary Policy. Monetary Transmission. 1) Exchange rate channel

malha
Télécharger la présentation

Dollarization and Monetary Transmission in Turkey

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Dollarization and Monetary Transmission in Turkey Erdem BAŞÇI Vice Governor Central Bank of Turkey

  2. Asset Dollarization Share of FX-Denominated Deposits in Total Deposits

  3. Monetary Policy

  4. Monetary Transmission 1) Exchange rate channel • Direct • Indirect 2) Credit channel 3) Expectations channel

  5. Monetary Transmission 1) Exchange rate channel • Direct • Indirect 2) Credit channel 3) Expectations channel

  6. Pass-through to CPI is reduced to a large extent under float. Exchange Rate Channel (Direct): Pass-Through - 1 Cumulative Exchange Rate Pass-Through to Consumer Inflation: VAR Evidence Source: Kara and Öğünç (2005)

  7. Especially pass-through to non-tradables is diminished considerably under the floating exchange rate regime Exchange Rate Channel (Direct) Pass-Through - 2 Indexation Behavior: Pass-Through Coefficient in Tradables vs. Non-Tradables Source: Kara et al (2005)

  8. Monetary Transmission 1) Exchange rate channel • Direct • Indirect 2) Credit channel 3) Expectations channel

  9. Exchange Rate Channel (Indirect) Time-Varying Impact of a Real Exchange Rate Appreciation on Demand Source: Sarıkaya et al (2005)

  10. Exchange Rate Channel (Indirect): Liability Dollarization of Firms - 1 Non-Bank Firm FX Position Nominal (Million US Dollar) Related Ratios (Percentage) Source: CBRT (2006)

  11. Exchange Rate Channel (Indirect): Liability Dollarization of Firms - 2 • Firms only partially match the currency composition of their debt with their income streams, which makes them potentially vulnerable to balance sheet affects of exchange rate depreciations. Consistent with this argument, real exchange rate depreciations are found to be contractionary, in terms of investments and profits, for sectors with higher liability dollarization. (Kesriyeli et al, 2005)

  12. Monetary Transmission 1) Exchange rate channel • Direct • Indirect 2) Credit channel 3) Expectations channel

  13. Credit Channel: Interest on Demand Source: Sarıkaya et al (2005)

  14. Credit Channel: Demand on Inflation Source: Sarıkaya et al (2005)

  15. Credit Channel: Total Loans Private Sector Credits/GDP Source: CBRT (2006)

  16. Credit Channel: Consumer Loans - 1 • While corporate loans are relatively less sensitive to policy rates, the long-term pass-through on cash and automobile loans is one-for-one and on housing loans is more than one for one. (Aydın, 2006)

  17. Credit Channel: Consumer Loans - 2

  18. Monetary Transmission 1) Exchange rate channel • Direct • Indirect 2) Credit channel 3) Expectations channel

  19. Expectations Channel - 1 • The outstanding disinflation performance for four consecutive years contributed to the credibility accumulation of the CBRT. Inflation Targets and Realizations Source: CBRT

  20. Expectations Channel - 2 Credibility Gap (End Year) Source: CBRT

  21. Expectations Channel - 3 Credibility Gap (December 2006 Survey) • End Year: 9,9 % • 12 Months Ahead: 7,2 % • 24 Months Ahead: 5,6 % • Target (2007-9) 4,0 % Source: CBRT

  22. Expectations Channel - 4 • The effectiveness CBRT policy decisions on expectations can be gauged using yield curves. The monetary tightening on June 7, 2006 where the CBT raised the short-term policy rate from 13.25 to 15 has been successful in even to the extent of reducing long-term bond yields mainly due to improved medium-term inflation expectations Yield Curve Response to Recent Policy Tightening Source: Akıncı et al (2006)

  23. Conclusion 1) Exchange rate channel • Direct • Indirect 2) Credit channel 3) Expectations channel … are all affected by the absence or presence of dollarization.

  24. Thank you…

  25. Dollarization and Monetary Transmission in Turkey Erdem BAŞÇI Vice Governor Central Bank of Turkey

More Related