2008 global financial crisis and macro deviation policy tools used by the CBT after the global crisis

The problems that began in the repayment of subprime loan debts in the US housing market in 2007 grew steadily and turned into financial frustrations in 2008. The financial crisis has become a production crisis, spreading to the real sector and gaining a global dimension by spreading to developed countries from developed economies. The 2008 global financial crisis has taught central banks to see risks accumulating in the financial system and to keep in mind the extreme increases in asset prices. Financial stability is an indispensable element for the proper functioning of the economic life, and any instability that will arise in the financial system will be reflected in the real economy and therefore will bring significant problems throughout the economy. Depending on the course of the conjuncture in countries under the management of crisis economies and in the implementation of stabilization policies, different policy instruments and different monetary transmission channels have been used by central banks. In this study, the monetary policy and policy instruments followed by the Central Bank of the Republic of Turkey (CBT) before and after the global crisis, the crisis period and afterwards have been extensively examined. The CBRT has devised a monetary policy in which the interest rate corridor and the required reserves are actively used in the framework of the exit strategy from the crisis announced on April 14, 2010, and the new instruments such as the reserve option mechanism have passed through as monetary policy applications. Despite the outbreak of the crisis in 2008, pre-crisis Turkish economy has positive economic indicators and the negative impact of the crisis was felt in our country in 2009. Since the end of 2010, the CBRT has put into effect a new monetary policy framework that takes macro financial risks into consideration. From 2010 onwards, Turkey has resumed its development process by avoiding the effects of the crisis. The fact that the Turkish banking sector has access to funding resources at low cost during the exit from the crisis has brought about a rapid growth in consumer loans. The rapid increase in consumer loans negatively impacted savings and caused the current deficit to increase. The CBRT has raised the funding costs of banks with the implementation of interest rate corridors and required reserves channels and has tried to prevent the current account deficit by controlling rapid credit expansion.