TCMB's Financial Account Revisions Reveal Hidden Roots of Net Error and Omission

The Turkish Central Bank’s (TCMB) Financial Account Revisions and Net Error and Omission analysis exposes the data inconsistencies that transformed the Net Error and Omission (NHN) line from a positive spike in 2021‑2022 to a negative trend in 2023‑2025.

Data Source Lines: NHN’s Volatility Story

■2021‑2022 period: + $34.3 bn NHN

■2023‑2026 period: - $57.8 bn NHN

■Post‑revision: - $23.5 bn NHN

BIS Data Limits: Beyond Overseas Deposits

■Domestic residents’ foreign deposits adjusted using SWIFT data to -13.3 bn USD

■This shift reflects accurate allocation rather than a new source inflow/outflow

Derivatives: Mis‑categorized Gains and Losses

■Swap, forward and option P&L moved to the Financial Derivatives line

■2014‑2026 period: +6.5 bn USD net loss recorded in NHN

Effective Movements: In‑land vs Out‑of‑land Sources

■Since 2021, a monthly regression model separates foreign‑origin and domestic effective entries

■Model residuals reveal that NHN fluctuations were largely domestic‑origin

Stagnant Current Account: Why NHN Decreases?

■The Current Account remains unchanged; NHN adjustments were purely financial‑account re‑classifications

■This provides a stronger assessment of current account deficits and external financing needs

Improving Data Quality: Role of New Sources

■Integration of BIS, SWIFT and Registry data expands coverage and consistency of statistics

■NHN remains high in the first five months of 2026, but temporary data corrections are expected

Kerem Tufan: By tightening macro‑economic transparency, these revisions are a pivotal step to mitigate credit‑market and SME‑credit contraction risks. The corrections in Net Error and Omission will better reflect the true performance of the financial system, enhancing risk measurement in banking and enabling policymakers to make more informed decisions.