In 2023, the Turkish central bank reported a loss of 818.2 billion liras ($25 billion), a stark contrast to the 72 billion-lira profit recorded in 2022. This loss marks a significant departure from years past when the bank had been profitable due to high interest rates and a government-funded savings program aimed at protecting depositors from currency devaluation. The size of the loss highlights the challenges of managing the Turkish economy amidst economic volatility and uncertainty.
The central bank has struggled to unwind the KKM mechanism, implemented in late 2021 to support the lira’s value. The loss underscores the complexities involved in managing the Turkish economy and raises questions about the effectiveness of measures put in place to protect the lira and stabilize the economy. Moving forward, policymakers will need to reassess their strategies and address underlying issues contributing to this significant loss.
