New Monetary Policy Frame and Tools of the Central Bank in Turkey

Abstract

The excessive expansionary (quantitative easing) monetary policy implemented by developed countries’ central banks in order to overcome 2008 financial crisis has adversely affected the financial stability of developing economies on a large scale.

This new conjuncture that emerged after the global crisis has led the said central banks to search for a new monetary policy. In this context, the Central Bank of the Republic of Turkey (The CBRT) has designed and implemented a new monetary policy framework since the end of 2010.

Here, being mainly a descriptive and compilation study, the general framework of the monetary policy implemented by the CBRT after targeting price stability as well as financial stability are explained. In addition, what kind of monetary policy instruments developed by the CBRT with the aim of controlling the effects of the quantitative easing policies in developed countries threatening economy of Turkey will be analysed and it will be explained for which purposes and how these instruments are used.