Özet:

Dollarization is the use of a foreign currency instead of the domestic currency in a country. In Turkey, the roots of dollarization phenomenon started to form in the late 1960s and early 1970s, together with the legislations about foreign currency deposits. Later the reforms about financial liberalization, the changes in foreign exchange regulations, and macroeconomic developments in the 1980s and 1990s played important roles on the development of dollarization in Turkey. The high dollarization ratios of those days showed remarkable declines time to time, however, the dollarization maintains its importance in today’s Turkey. In our study, it is examined whether currency substitution in Turkey has ratchet effect in short and long term, using ARDL model in the period of 2008 September to 2021 February. it has been concluded that there is a significant ratchet effects in dollarization and that long-term effects are more significant than short-term effects in currency substitution. In Turkey, dollarization stands out as a method of protection because of insufficient trust in the national currency. Since the dollarization process in Turkey is not a short-term process and such high dollarization has occurred with years of experience, solutions should be discussed and put forward in a long-term manner. Within this framework, CBRT should put forward a strong and sustainable monetary policy for residents to rely on TL again.

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