The banking system is likely to be the most serious long-term test of the Turkish government’s compliance with the IMF programme negotiated last year.
The banking environment changed dramatically after the IMF stand-by agreement went into effect late in 1999. Turkey undertook to put in place and enforce stringent banking regulations. The IMF refused to put its signature to the accord before Turkey seized five weak banks that were being kept afloat for political reasons. A new banking supervisory agency started work in September and is entrusted with maintaining a healthy banking sector.
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