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Turkey corporate debt, FX exposure, and KKM phase-out

Updated 9 times since CLSTR started tracking revisions of this situation.

What changed

2026-08-27 13:15 UTC → 2026-08-27 16:38 UTC · added ~~removed~~

Turkey corporate debt, FX exposure, and ~~distress~~ KKM phase-out

By late August 2026, Turkey’s economic distress manifested in a the total evaporation of the Currency Protected Deposit (KKM) ~~system, with balances hitting zero during~~ system. According to the ~~week~~ Banking Regulation and Supervision Agency (BDDK), the remaining 4 million lira in KKM accounts was depleted, marking the end of ~~August 21. While~~ a system that began in December 2021. Economist Mahfi Eğilmez estimated the total cost of the KKM era to the Turkish economy at least 58.9 billion dollars, factoring in tax losses and indirect damages to the Central Bank. While the KKM system wound down, the broader banking sector showed growth. As of August 21, total deposits rose to 32.32 trillion lira, and total credit volume reached 27.73 trillion lira. However, consumer loans decreased by 23.03 billion lira to 3.42 trillion lira, and the sector faced rising non-performing loans, which reached 838.97 billion lira. The industrial sector continues to contract under high inflation and financing difficulties. Manufacturing employment has dropped by over 60,000 people in the past year, and the share of wage earners in the sector fell to 27.6%. This strain is exemplified by the bankruptcy of Bursa-based Güzeldağ Tekstil Dericilik Sanayi ve Ticaret Limited Şirketi following a rejected concordat request. Social pressure from debt is intensifying. Data from the National Judicial Network Information System shows that 6,555,000 new enforcement files were opened between January 1 and August 21, 2026, averaging approximately 28,000 new files daily. Total pending enforcement files have reached 26 million. CHP Mersin Deputy Gülcan Kış attributed this surge to eroding purchasing power, noting that in the first half of the year, approximately 1,117,000 individuals faced enforcement proceedings due to an inability to repay personal loans or credit card debts. ~~Kış stated that citizen growth is primarily characterized by “rising debt, interest, and legal enforcement actions.”~~

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