RECENT DEVELOPMENTS IN GOLD DEPOSIT ACCOUNTS IN TURKEY Erkan Kilimci, Executive Director Central Bank of the Republic of Turkey 22 August 2015 22 August 2015
Physical gold is a traditional investment for Turkish people. p p Traditional Demand for Gold Source: Turkish State Mint Last Observation : July 2015 Source: Turkish Statistical Institute Last Observation : 2014 2
Sustained high level of inflation for years induced households to hold gold. g Inflation Rate (CPI YoY, %) Source: CBRT, Bloomberg Last Observation : June 2015 3
Gold served as a safe investment under frequent and sharp FX fluctuations. p Gold and USD Return (% Change since 30/06/2000) Source: Bloomberg Last Observation : April, 2015 4
As the economy prosper gold become available for many. GDP Per-Capita (USD) Source: World Bank, Bloomberg Last Observation : 2014 5
Turkey covers its domestic demand and some of its export production with imports. Jewellery Trade (Million USD) Source: Turkish Statistical İ nstitute Last Observation : June 2015 6
Turkey has a fair amount of gold demand. Gold Demand Gold Demand (in tonnes) Source: Reuters Last Observation : March 2015 7
Mining and recycled gold reserves are not enough to meet the demand for gold. Turkish Recycled Gold Reserves (in tonnes) Source: World Gold Council Last Observation : 2013 8
Turkey accumulated physical gold for long years. Net Accumulation (Cumulative in Tonnes) Source: Turkish Statistical İ nstitute İ Last Observation : May 2015 9
On the other hand Turkey like many other emerging economies suffers from low levels of savings. Source: IMF, Bloomberg Last Observation 2014 EM countries : S.Africa, Hungary, Brazil, Argentina, Colombia, Chile, Mexico; Czech Rep. , Poland 10
Financial inclusion policies should target the unbanked women population. Account Penetration (Share Without any Bank Account, Women) Source: Global Findex Database, World Bank. Last Observation : 2014 11
Reserve Option Mechanism in Turkey 12
CBRT allowed banks to hold a fraction of their reserve requirements for TL liabilities in gold and FX. If ROM utilized at max 100TL RR 60% 99TL in FX 38,1 USD 30% 43,5TL in Gold 0,4 gr 10% 10TL 10,0 TL Source: BRSA Last Observation : May 2015 13
Banks fully utilized the option to hold Gold instead of Turkish Lira. FX and Gold ROM Utilization Rate (%) ( ) Source: CBRT Last Observation : June 2015 14
Banks use «golden days» to collect gold. Golden Days Regulatory Bodies CBRT-BRSA Storage Accounts Accounts Banks’ Banks’ Ph Physical i l Gold Branches Refineries Experts Experts Source: CBRT 15
Gold accounts and transactions are regulated. Gold Accounts Gold Accounts • Accounts can consist of at least 995/1000 pure bar and ingot of raw golds. • Accounts can be open as time deposit or demand deposit A t b ti d it d d d it • Bankbooks are given to customers. • Interest payments can be done via TL, FX or gold. • Bank can buy golds from the customers by paying TL or FX. • Customer can withdraw in TL or gold ingot. 16
Golden days practice stands as a simple yet effective way of bringing gold back in the economy. Collected Gold in the Golden Days (Tonnes) Source: Istanbul Gold Refinery Last Observation : July 2015 17
Gold deposit accounts increased substantially by pulling physical gold in to the financial system. Gold Deposits Reserve Option Mechanism Introduced Source: CBRT Last Observation : June 2015 18
Once people used to gold accounts it is easier for them to invest in other forms. Gold vs USD Deposits Deposits Source: CBRT Source: CBRT Last Observation : June 2015 Last Observation : June 2015 Excludes accounts in participation banks 19
International gold reserves increased from 176 tonnes to 462 tonnes. Source: CBRT Source: CBRT. Last Observation : May 2015 Last Observation : May 2015 20
Gold is a unique reserve asset which makes it a viable choice for portfolio diversification Current A year Ago % Change Total 29,124 29,041 0.29 Euro Area 9,835 9,829 0.06 US 7,413 7,413 0.00 Germany Germany 3,084 3,084 3,085 3,085 -0.02 0.02 Italy 2,235 2,235 0.00 France 2,220 2,220 0.00 China China 961 961 961 961 0 00 0.00 Switzerland 948 948 0.00 Japan 697 697 0.00 N Netherlands h l d 558 558 558 558 0 00 0.00 India 508 508 0.00 Turkey 462 453 1.92 Source: Bloomberg Last Observation : May 2015 21
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