The analysis of reserve option mechanism and coefficient in theframework of monetary policy: Example of the TCMB

Reserve Option Mechanism (ROM), the Central Bank of Turkey's main objective of price stability as well as financial stability also is a monetary policy tool developed way to Turkey to cover, somehow it has space applications relating to reserve requirements. Although Rom seems to be a single vehicle as its application area, it has an effect on many variables such as inflation, exchange rate and capital flows in the economy. In this study, Reserve Option Mechanism (ROM), and the Reserve Option Coefficient (ROK) 's change in Turkey's Central Bank foreign exchange reserves, producer and consumer inflation rates, inflation and uncertainty of the exchange rate in effect on the fluctuations occurring vector autoregression model with autoregressive conditional of varying variance model has been analyzed. The result of the analysis, the rum in the face of a standard ~ error shock occurring Turkey's Central Bank's foreign exchange that gave positive response for two months, the change in reserves, as well as the Consumer Price Index and Producer Price Index based for two months but gave similar responses to the inflation rate a low level of negative response was observed. However, it was concluded that this reaction became meaningless. Similarly, in response to the increase in ROM, the response of the two-year bond interest rate was negative for two months and then this reaction became meaningless. Key Words: Monetary Policy, Monetary Policy İnstruments, Reserve Requirements, Reserve Option Mechanism, Reserve Option Coefficient.