Turkey frees up banks' lira reserves to strengthen crisis defence

Turkey's central bank unveiled a series of policy changes on Monday aimed at boosting banks' liquidity and increasing its own foreign exchange reserves as global growth slows and the European debt crisis hammers investor confidence.
The major emerging economy continues to grow at a rapid pace, but economists fears about overheating have given way to worries that the darkening outlook could undermine sentiment and hurt the economy. The central bank said it would allow banks to meet up to 10 percent of their reserve requirements in dollars or euros, freeing up a maximum of $3.9 billion of Turkish lira reserve requirements in the period to September 30.
The bank had signalled on Tuesday it could do this as an initial step in easing policy if global economic problems intensify. Analysts said then the move would ease pressure on banks and free up some cash in a difficult economic environment. "Recent developments have led to increased concerns regarding sovereign debt problems in some European countries and the global growth outlook," the central bank statement said.