Turkey provides easy access to large consumer markets in Europe, Eurasia, the Middle East and North Africa due to its central location. Turkey has a liberalized financial market with the Turkish Lira as its currency, and money market instruments include treasury bills, bankers' acceptances, certificates of deposit, and short term loans. The Central Bank of Turkey effectively manages liquidity and provides support to ensure financial stability.

1. -By
Kriti Sinha
Prateeti Goyal

2. Turkey is-:
 A natural bridge between both East-West and
North-South axes, thus creating an efficient and
cost effective outlet to major markets
 Easy access to 1.5 billion customers in Europe,
Eurasia, the Middle East and North Africa
 Access to multiple markets worth USD 25 trillion
of GDP

3.  Money market means market where money or
its equivalent can be traded.
 Due to highly liquid nature of securities and
their short term maturities, money market is
treated as a safe place.
 Examples of Money Market instruments are:
treasury bills, commercial papers and banker’s
acceptances etc.

4.  Turkey’s financial market is highly liberalized.
 The currency of Turkey is Turkish Lira.
 The Central Bank of the Republic of Turkey
(CBRT) has effective instruments for managing
liquidity and flexibility to provide emergency
lending assistance.
 Despite the global financial crisis, Turkey’s
banking sector remains sturdy and profitable.

5.  Treasury Bills (T-Bills)
1. Treasury Bills, one of the safest money market
instruments, are short term borrowing instruments of
the Central Government of the Country issued
through the Central Bank (CBRT in Turkey).
2. The financial weakness of the banking sector before
2001 led to a major financial crisis in 2001.
3. This encouraged Turkish banks to make excessive
purchases of treasury bonds and bills (in Turkish
lira) in order to obtain high rates of return.

6.  Bankers’ Acceptance
 It is a short term credit investment created by a
non financial firm and guaranteed by a bank to
make payment.
 It is a buyer’s promise to pay to the seller a certain
specified amount at certain date. The same is
guaranteed by the banker of the buyer in exchange
for a claim on the goods as collateral.
 The most common term for these instruments is 90
days. However, they can very from 30 days to180
days.

7.  Certificate of Deposit:
1. It is a short term borrowing more like a bank
term deposit account.
2. It is a promissory note issued by a bank in form
of a certificate entitling the bearer to receive
interest.
3. The certificate bears the maturity date, the fixed
rate of interest and the value. It can be issued in
any denomination.

8.  Short Term Loan:
1. Turkey has become the third largest credit card
market in Europe, following the UK and Spain in
terms of number of cards and tenth in terms of
the money spent through credit cards.
2. Credit card loans and non-performing loans have
been rising continuously (unemployment has
also been rising) which may pose a significant
credit risk for the banks.
3. The Central Bank reported a sharp increase in
credit-card balances incurring interest charges
and defaults on credit-cards.

9.  With transition to floating exchange rate regime in
February 2001, the Central Bank of the Republic
of Turkey (CBT) adopted short-term policy rates
as its main policy instrument. Owing to this regime
that provides efficiency as well as room for
flexibility, the CBT managed to establish a
framework that minimizes any volatilities in short-
term interest rates and ensures smooth functioning
of the payments system.

10.  Given the resilient structure of Turkish banking
system, the flexible collateral system and the
Central Bank’s Turkish lira liquidity facilities, it is
seen that adequate facilities are effectively
provided, with no need for other instruments, for
the orderly functioning of money markets and
maintaining the financial stability in Turkey.

11.  After the economic collapse the control of the
money market went into the hands of the Central
Bank of the Republic of Turkey, with interbank
money market being the major component of the
money market. Some broad and basic credits given
in lieu of short term credits have been listed next.

12.  Accordingly, the credits will be available:
 As advance payments, with one month maturities, for
a maximum period of one year,
 At the lending rate set for the intraday transactions
carried out at the Interbank Money Market; bearing
in mind the principle that interest rates applicable to
credits of this nature are higher than those applicable
to normal open market transactions of the central
banks,
 Against collaterals accepted at the Interbank Money
Market,
 Being limited to the amount twice as much as the
equity capital of the applying bank.


13.  LIBERAL AND REFORMIST INVESTMENT
CLIMATE
 The second biggest reformer among OECD
countries in terms of its restrictions on FDI since
1997 (OECD FDI Regulatory Restrictiveness
Index 1997-2010)
 Business-friendly environment with average of 6
days to set up a company, while the average in
OECD members is more than 12 days
 Highly competitive investment conditions

14.  Strong industrial and service culture
 Equal treatment for all investors
 Around 30,000 companies with international
capital
 International arbitration
 Guarantee of transfers