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Ankara startles banks as indebted companies hope for lifeline

Ankara’s apparent intention to dictate "tolerance" by banks toward heavily indebted companies has raised concerns in the banking sector and potential rescue plans lack real financing options.
People withdraw money from a bank ATM in Izmir, Turkey August 18, 2018. REUTERS/Osman Orsal - RC1CDE255B70

In mid-2013, the US Federal Reserve announced plans to end crisis-management monetary expansion and start hiking rates, in a heads-up to emerging economies that the abundance of cheap money they enjoyed on the global market would soon come to an end. Not everyone heeded the warning.

Paying no mind to the changing climate, Turkey continued to borrow while burying the loans into the domestic market, especially the construction sector. After the new US policy took effect, global funds began to avoid and even exit countries like Turkey, causing local currencies to plunge and pushing up the price of the dollar.

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