IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Log in (now much improved!) to save this article

Reserve Options Mechanism : A New Macroprudential Tool to Limit the Adverse Effects of Capital Flow Volatility on Exchange Rates

Listed author(s):
  • Arif Oduncu
  • Yasin Akcelik
  • Ergun Ermisoglu

Reserve Options Mechanism (ROM), which is the option to hold FX or gold reserves in increasing tranches in place of Turkish Lira reserve requirements of Turkish banks, was designed and launched by the Central Bank of the Republic of Turkey (CBRT). ROM is a tool unique to the CBRT and it is aimed to support the FX reserve management of the banking system and to limit the adverse effects of excess capital flow volatility on the macroeconomic and financial stability of Turkey. In this paper, we study the effectiveness of ROM on the volatility of Turkish Lira, and to the best of our knowledge, it is the first analytical paper on investigating the effects of the ROM. The results suggest that ROM is an effective policy tool in decreasing the volatility of Turkish lira during the sample period.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://www.tcmb.gov.tr/wps/wcm/connect/TCMB+TR/TCMB+TR/Main+Menu/Yayinlar/Central+Bank+Review/Central+Bank+Review/2013/Sayi+13-3/
Download Restriction: no

Article provided by Research and Monetary Policy Department, Central Bank of the Republic of Turkey in its journal Central Bank Review.

Volume (Year): 13 (2013)
Issue (Month): 3 ()
Pages: 45-60

as
in new window

Handle: RePEc:tcb:cebare:v:13:y:2013:i:3:p:45-60
Contact details of provider: Postal:
Head Office, Istiklal Cad. 10 Ulus, 06100 Ankara

Phone: (90 312) 507 5000
Fax: (90 312) 507 5640
Web page: http://www.tcmb.gov.tr/
Email:


More information through EDIRC

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as
in new window


  1. Dominguez, Kathryn M., 1998. "Central bank intervention and exchange rate volatility1," Journal of International Money and Finance, Elsevier, vol. 17(1), pages 161-190, February.
  2. Arif Oduncu, 2011. "The Effects of Currency Futures Trading on Turkish Currency Market," Journal of BRSA Banking and Financial Markets, Banking Regulation and Supervision Agency, vol. 5(1), pages 97-109.
  3. Eric V. Clifton, 1985. "The currency futures market and interbank foreign exchange trading," Journal of Futures Markets, John Wiley & Sons, Ltd., vol. 5(3), pages 375-384, 09.
  4. Domac, Ilker & Mendoza, Alfonso, 2004. "Is there room for foreign exchange interventions under an inflation targeting framework ? Evidence from Mexico and Turkey," Policy Research Working Paper Series 3288, The World Bank.
  5. Christian Glocker & Pascal Towbin, 2012. "Reserve Requirements for Price and Financial Stability: When Are They Effective?," International Journal of Central Banking, International Journal of Central Banking, vol. 8(1), pages 65-114, March.
  6. Mimir Yasin & Sunel Enes & Taşkın Temel, 2013. "Required reserves as a credit policy tool," The B.E. Journal of Macroeconomics, De Gruyter, vol. 13(1), pages 1-58, June.
  7. Disyatat, Piti & Galati, Gabriele, 2007. "The effectiveness of foreign exchange intervention in emerging market countries: Evidence from the Czech koruna," Journal of International Money and Finance, Elsevier, vol. 26(3), pages 383-402, April.
  8. Erdem Başçı & Hakan Kara, 2011. "Finansal istikrar ve para politikası," Iktisat Isletme ve Finans, Bilgesel Yayincilik, vol. 26(302), pages 9-25.
  9. Reinhart, Carmen M & Reinhart, Vincent R, 1999. "On the Use of Reserve Requirements in Dealing with Capital Flow Problems," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 4(1), pages 27-54, January.
  10. Hakan Berument & Asli Günay, 2003. "Exchange Rate Risk and Interest Rate: A Case Study for Turkey," Open Economies Review, Springer, vol. 14(1), pages 19-27, January.
  11. Bollerslev, Tim, 1986. "Generalized autoregressive conditional heteroskedasticity," Journal of Econometrics, Elsevier, vol. 31(3), pages 307-327, April.
  12. A.Hakan KARA, 2012. "Küresel kriz sonrası para politikası," Iktisat Isletme ve Finans, Bilgesel Yayincilik, vol. 27(315), pages 09-36.
  13. Gustavo Abarca & Claudia Ramírez & José Gonzalo Rangel, 2012. "Capital Controls and Exchange Rate Expectations in Emerging Markets," Working Papers 2012-08, Banco de México.
  14. Christian Jochum & Laura Kodres, 1998. "Does the Introduction of Futures on Emerging Market Currencies Destabilize the Underlying Currencies?," IMF Staff Papers, Palgrave Macmillan, vol. 45(3), pages 486-521, September.
  15. Yasin Akcelik & Erdem Basci & Ergun Ermisoglu & Arif Oduncu, 2013. "The Turkish Approach to Capital Flow Volatility," Working Papers 1306, Research and Monetary Policy Department, Central Bank of the Republic of Turkey.
  16. Yasin Akcelik & Ergun Ermisoglu & Arif Oduncu & Temel Taskin, 2012. "Ek Parasal Sikilastirma’nin Doviz Kurlari Uzerindeki Etkisi," CBT Research Notes in Economics 1230, Research and Monetary Policy Department, Central Bank of the Republic of Turkey.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:tcb:cebare:v:13:y:2013:i:3:p:45-60. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()

or ()

or ()

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.