Turkey's Currency-Protected Deposit Scheme Ends After Two Years

Turkey's innovative, yet controversial, Currency-Protected Lira Deposit (KKM) scheme has officially concluded. Introduced in December 2021, the program aimed to shield citizens' savings from the volatile Turkish Lira's depreciation against foreign currencies. At its inception, the Lira saw a significant appreciation, but the currency's value continued to decline, nearing 30 against the US dollar approximately two years later.

The economic cost and perceived damage of the KKM system were frequently criticized by opposition parties. A shift in economic management following the May 2023 elections marked a turning point. The Turkish Central Bank (TCMB) began covering KKM payments, creating an additional burden on the bank.

Finance Minister Mehmet Şimşek and TCMB President Hafize Gaye Erkan initiated steps to dismantle the KKM system. Measures included raising Lira deposit interest rates to encourage an exit from KKM, lowering KKM interest rates, and increasing the mandatory reserves banks had to deposit with the TCMB for KKM accounts. Furthermore, it was announced that no new KKM accounts could be opened after January 1, 2024.

The TCMB formally announced the termination of the KKM scheme on August 23, 2025. The final step involved zeroing out all KKM accounts as of the past week, marking the official end of the program. Banking Regulation and Supervision Agency (BDDK) data from the week of August 21 shows total deposits reaching 32.3 trillion Turkish Lira, while non-performing loans in the banking sector increased to 838.97 billion Turkish Lira.