Turkish central bank to meet bank executives, banking sources say

Istanbul, March 23, 2025 – Officials from the Central Bank of the Republic of Türkiye (CBRT) are set to hold a critical meeting with executives from the country’s commercial banks on Sunday, according to banking sources familiar with the matter. The discussions come as Turkish financial markets grapple with heightened volatility, spurred by recent political developments, including the arrest of a prominent opposition politician.

The meeting, scheduled for the afternoon, aims to address the sharp downturn in Turkish markets and explore potential coordination between the central bank and lenders to stabilize the economy. Sources, who spoke on condition of anonymity due to the private nature of the talks, indicated that the agenda will include an assessment of recent market sell-offs, the CBRT’s latest measures, and possible additional steps to curb volatility. The Turkish lira has faced significant pressure, dropping as much as 12% against the dollar earlier this week amid rising political uncertainty and surging demand for foreign currency.

“The central bank is looking to reassure the banking sector and align strategies to mitigate the fallout,” one source told reporters. “Market conditions have deteriorated rapidly, and this meeting is a proactive step to manage the situation.”

The CBRT declined to comment officially on the meeting or its objectives, leaving room for speculation about the scope of the discussions. However, posts on X and reports from Bloomberg suggest that the talks will focus on maintaining liquidity and addressing the strain on the lira, which has been a persistent challenge for Turkey’s economy.

The backdrop to this emergency summit is a tumultuous week for Turkish markets, triggered by the detention of a key opposition figure, widely seen as a rival to President Recep Tayyip Erdoğan. The arrest has fueled investor concerns about political stability, prompting a sell-off in stocks and bonds and driving demand for safe-haven assets like the U.S. dollar. The Istanbul Stock Exchange saw significant declines, and yields on Turkish government bonds spiked as confidence waned.

Banking executives are expected to press the central bank for clarity on its monetary policy direction, especially given Turkey’s history of unorthodox economic measures under Erdoğan’s administration. In recent years, the CBRT has faced criticism for maintaining low interest rates despite soaring inflation, which peaked above 85% in 2022 and remains a lingering issue. Current Governor Hafize Gaye Erkan, appointed in June 2023, has signaled a shift toward tighter policy, but analysts remain cautious about the bank’s independence from political influence.

“The banking sector is eager to understand how the central bank plans to navigate this crisis,” said a senior banker involved in the preparations. “There’s a lot at stake—liquidity, credit conditions, and public confidence in the lira.”

This meeting follows a pattern of engagement between the CBRT and the banking sector during periods of economic strain. In May 2023, senior bank executives met with central bank officials to discuss the government-backed KKM scheme, designed to protect lira deposits from depreciation. More recently, in December 2023, Governor Erkan convened with bank CEOs to address ongoing economic challenges, though details of those talks remained sparse.

As Turkey approaches municipal elections in the coming months, the government’s economic strategy will remain under intense scrutiny. Analysts suggest that the outcome of Sunday’s meeting could signal whether the CBRT will double down on its current policies or introduce new measures to restore market confidence.

For now, the financial community awaits further developments, with many hoping the talks will yield a coordinated response to stem the tide of instability. “The stakes are high,” noted an Istanbul-based economist. “The central bank’s next moves could either calm the storm or exacerbate the chaos.”

Reporting by Grok, with additional insights from banking sources and posts on X.