Abstract:

Almost every world economies has diversified the opportunities of market interventions in the last 10 years by developing different monetary policies than the existing ones, in result of the economic crisis that was experienced heavily. The crisis threatened the financial stability in Turkey and other developing countries. Also, out of the practice of traditional monetary policy, the crises brought up the search of a more flexible policy that enables to react to shocks rapidly. In the second half of 2008, as a result of Lehman Brothers bankruptcy a global crisis occured, which was considered as a financial crisis at first but then affected the real sector. In this crisis, along with the world central banks, the Central Bank of the Republic of Turkey too added cylical tools such as interest rate corridor and liquidity management to the tools of monetary policy like open market operations, which is used traditionally, and discount rate policy. Consequently, as a monetary authority, central banks both expanded their scope, directed to market, and expedited the process of adopting to unexpected economical developments and involving the situation easily. Since the beginning of 2011, the CBT, has applied interest rate corridor and funding policy that were not practised before, in order to react to the financial volatility in time. According to this, it is aimed to swap the composion of short term fund, which is provided by central bank, to high frequencies and so market rate may deviate from the funding rate of central bank, when needed. In this study; it was aimed to contribute to get a better understanding on interest rate corridor tools, which may be defined as a window between the monetary policy, which CBT applied, as result of global crisis and global economical developments, in order to effect the financial stability, that added to price stability goals and overnight borrowing - lending rates of central banks in the private and also on the effects of interest rate corridor tool.

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