Turkey's KKM system reaches zero balance as banking sector grows

The Currency-Protected Deposit (KKM) system in Turkey has effectively reached a zero balance, marking the end of a financial era that began in December 2021. According to the latest weekly bulletin from the Banking Regulation and Supervision Agency (BDDK), the remaining 4 million lira in KKM accounts has been depleted.

While the KKM system has wound down, the broader banking sector showed growth in other areas. As of August 21, total credit volume rose by 50.98 billion lira to reach 27.73 trillion lira. Total deposits also increased by 506.47 billion lira, climbing to 32.32 trillion lira. However, consumer loans saw a decrease of 23.03 billion lira, falling to 3.42 trillion lira.

Economist Mahfi Eğilmez noted the significant economic impact of the KKM era, estimating the total cost to the Turkish economy at least 58.9 billion dollars when accounting for tax losses and indirect damages to the Central Bank. The phase-out of KKM is viewed as a key step in the government's economic balancing strategy to reduce conditional public liabilities and encourage investment in standard Turkish Lira assets.