Institutional Framework

Institutional Framework

In Turkey, authorities responsible for financial stability take policy measures as part of their duties, mandates and responsibilities, taking into account the macroprudential policies.

Relevant Authority Area of Responsibility
Central Bank of the Republic of Turkey (CBRT) Implementation of monetary policy and exchange rate regime to achieve price stability and financial stability, management and supervision of payment and settlement systems
Banking Regulation and Supervision Agency (BRSA) Supervision of all banks, financial holding companies, leasing companies, factoring companies and consumer finance companies, and regulations regarding their activities
Undersecretariat of Treasury (UT) Public finance, implementation of fiscal policy, and supervision and regulation of insurance companies
Capital Markets Board (CMB) Supervision and regulation of securities brokers
Savings Deposit Insurance Fund (SDIF) Protecting the rights and interests of deposit holders, and resolution of banks

Moreover, several memoranda of understanding (MoU) between the Treasury, BRSA, CMB, SDIF and the CBRT contribute to the coordination, information sharing, and cooperation and thereby to maintaining financial stability and monitoring and managing systemic risk.

Other than the above-mentioned ones, there are some other institutional structures related to systemic risk and macroprudential policies. Some of these important institutions are the Financial Stability Committee and the Financial Sector Commission.

Financial Stability Committee

In line with the developments in the international platform and the need triggered by the global financial crisis, the Financial Stability Committee was established by the Decree in Power of Law No: 637 dated 8 June 2011 on the Organization and Duties of the Ministry of Economy. Members of the Committee are the Deputy Prime Minister for Economic and Financial Affairs in charge of the Undersecretariat of Treasury (Chair), Undersecretary of Treasury and Heads of the CBRT, BRSA, CMB and SDIF. The main tasks of the Committee are to monitor and prevent systemic risks and ensure the coordination regarding systemic risk management.

Tasks of the Committee are as follows:

  • Determining and monitoring systemic risks which could spill over to the whole financial system, and detecting necessary measures and policy proposals for mitigating these risks,
  • Warning the concerned parties about  systemic risks, and following the implementations related to warnings and policy proposals,
  • Assessing systemic risk management plans prepared by related institutions,
  • Ensuring the coordination on systemic risk management,
  • Collecting all sorts of data and information related to its mandate from public institutions, and ensuring coordination of the policies and their implementations among institutions,
  • Making decisions on other issues that fall within the scope of the legislation

Other ministers and public officials can also be invited to the Committee meetings by the Minister when he deems necessary. In addition, the Minister briefs the Council of Ministers on the results of the Committee meetings and the decisions made by the Committee. Sub-working groups have been doing some detailed research and conducting studies on issues related to financial stability. The secretariat of the Committee is carried out by the Treasury.

The Committee is accepted as an important step for Turkey towards a macroprudential policy design as it ensures a corporate structure for coordination among institutions and an efficient communication channel

Financial Sector Commission

Another important platform, which has a broader representative structure, is the Financial Sector Commission.  Members of the Commission are representatives of the BRSA, CBRT, Ministry of Finance, Undersecretariat of Treasury, CMB, SDIF, and Competition Authority, Ministry of Development, Borsa İstanbul, the Banks Association of Turkey and Participation Banks Association of Turkey.

The Commission ensures exchange of information, cooperation and coordination among institutions, proposes joint policies and expresses views regarding the matters that relate to the future of the financial sector, with a view to establishing and maintaining confidence and stability as well as development in the financial markets. The Financial Sector Commission convenes at least twice every year and briefs the Council of Ministers on the results of its meetings. The secretariat of the Commission is carried out by the BRSA

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