CBRT Initiates Liquidity Simplification: One-Week Repo Auctions Set to Resume

The Central Bank of the Republic of Turkey (CBRT) has announced a strategic simplification in its monetary policy operational framework, deciding to resume one-week repo auctions, which had been suspended on March 1, 2026. This pivotal move, aimed at reducing the weight of the overnight funding corridor in liquidity management, marks a critical turning point for market makers and the banking sector to steer funding costs toward a more predictable path.

Exiting the Corridor: Re-anchoring the Benchmark Policy Rate

Announced via the CBRT's press release on "Turkish Lira Liquidity Management," this decision aims to strengthen the transmission mechanism of monetary policy. The banking system's funding requirements will now be met directly through the primary policy tool—one-week repo auctions—rather than the highly volatile overnight interest rate corridor.

■1-week repo auctions will be positioned as the primary instrument to address liquidity tightness in the market.

■The margin between overnight lending and borrowing rates will be restored to its original corridor boundaries, ceasing to act as the primary source of funding.

■Volatility in banks' funding costs will decline, allowing treasury and Asset-Liability Management (ALM) departments to project balance sheets more robustly.

A New Era for Banking Sector and Liquidity Dynamics

This operational shift by the CBRT has the potential to directly reshape the funding composition of commercial banks. Eliminating the uncertainties brought by overnight funding will enable banks to establish more stable margins in loan and deposit pricing. In particular, pressure on deposit rates and bond yields is expected to ease.

Rüzgar Ersoy's Analysis: The CBRT's decision to rebuild its funding architecture around the one-week repo is highly positive for the banking sector's Net Interest Margin (NIM) management. The volatility created by the overnight corridor was undermining banks' funding cost predictability and exerting indirect pressure on Capital Adequacy Ratios (CAR). This operational simplification provides a more stable liquidity buffer for treasury departments managing rapid liquidity flows in the digital banking and payment systems ecosystem. Ultimately, this step instills confidence in the fintech ecosystem by enhancing monetary policy transparency.