National and Global Islamic Financial Architecture:
Prolems and Possible Solutions for the OIC Member Countries
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Traditionally, the reserve requirement ratios are important monetary policy instruments for
central banks. In line with the new strategy that took effect in the last quarter of 2010, the
CBRT, the Central Bank of the Republic of Turkey, developed a new policy framework towards
reducing macro financial risks within the limits of a favourable inflation outlook. Accordingly,
in addition to the traditional policy instrument of the one-week repo auctions rate, reserve
requirements were introduced as an active tool.
The CBRT defines and calculates reserve requirements for a number of liabilities for banks
including participation banks, which includes ‘deposits and participation funds’ (CBRT, n.d.).
As part of liquidity adequacy, participation banks in Turkey “are required to calculate,
maintain and report the liquidity sufficiency according to the procedures determined by the
BRSA and the Central Bank” (Thomson Reuters, 2014: 63). It should also be noted that in
response to bringing the liquidity coverage in line with Basel III standards, “the BRSA
introduced liquidity coverage ratios (LSR) in the Turkish banking sector to ensure that banks
have sufficient high-quality liquid assets (HQLA) to survive a significant, unexpected cash
outflow for up to 30 days. The LSR is a ratio of HQLA to total net cash outflows over a 30-day
stress period – i.e., total expected cash outflows less total expected cash inflows subject to a
cap of 75% of total expected cash flows” (Matthews and Keskin, 2015). This demonstrates the
BRSA’s commitment to a robust and resilient Turkish banking sector including participation
banks.
4.11.5. Information Infrastructure and Transparency
Accounting and Auditing Framework/Transparency and Disclosure
In Turkey, accounting standard setting institution is the POA (Public Oversight, Accounting and
Auditing Standards Authority), which was established on 02/11/2011 by Decree Law No. 660
and replaced the Turkish Accounting Standards Board (TASB). It is “the authority to set and
issue Turkish Accounting Standards compliant with the international standards, to ensure
uniformity, high quality and confidence in statutory audits, to set the auditing standards, to
approve statutory auditors and audit firms and to inspect their audits, and perform public
oversight in the field of statutory audits” (POA Wesbite, n.d.). It sets the accounting standards
that are fully compliant with the International Financial Reporting Standards (IFRSs) (POA,
2015), and this is partly due to the EU accession process which requires also the
harmonisation of accounting standards. Since the CMB is authorized on determining the
conditions of independent auditing activities of institutions and corporations within the scope
of capital market law, related with auditing of publicly traded companies, additional conditions
can be requested from independent audit firms authorized by the Public Oversight Accounting
and Auditing Standards Authority.
In line with EU laws and regulations associated with accounting practices, “in the Turkish
Commercial Code published in 2012, all companies have become obligatory to apply
accounting rules set by the POA and the POA is authorized to determine scope of the
application of Turkish Accounting Standards, which are in fully compliance with the
International Financial Reporting Standards. In line with EU practices, the POA has made
mandatory to apply Turkish Accounting Standards for public interest entities” (POA, 2015: 44).