The most important item in a debt restructuring package prepared by the government is seen as the change in the treasurer role of the central bank. Due to this change, the Finance Ministry can now earn interest on its fund of approximately TL 20 billion that is deposited in the central bank. Since the bank has accumulated a significant amount of funds, the interest payments will not overburden the Central Bank of Turkey.
Speaking to Today’s Zaman, Dr. Zeki Şahin from Çankaya University in Ankara said that this change does not affect the independence or autonomous structure of the central bank. “It means the period of perceiving the central bank as a public institution is over,” said Şahin, commenting on central bank’s habit for many years to use the funds of the State Economic Enterprises (KİTs) and the Treasury for free. “A revenue transfer from an autonomous institution to a public institution is a positive improvement from any point of view,” added Şahin.
Şahin also noted that the treasurer role of the central bank coming to an end will ease the move of the central bank from Ankara to İstanbul. “With this change the psychological resistance to Ankara-based bureaucracy will decline,” said Şahin. Commenting on a question of whether moving the money regulator of Turkey to İstanbul and paying interest to the Treasury will affect the bank, Şahin said that the central bank is strong enough to withstand these kinds of developments. “The central bank is an institution that gets income from every transaction in the banking sector therefore the interest payment to the Treasury will not affect its balance sheet,” said Şahin.
Şahin added that the Treasury was not paying any transaction costs since it was also not getting any interest income from its deposits into the central bank. “With the debt restructuring program, this will also change. Now the central bank will pay interest on Treasury funds, and the Treasury will need to pay transaction costs for every transaction,” said Şahin.
Source : http://todayszaman.com/news-228869-central-bank-to-pay-interest-on-treasury-deposits.html - Dec 6, 2010 |
