Türkiye’s fund liquidation process is proceeding as planned and is moving even faster than initially expected, Treasury and Finance Minister Mehmet Şimşek said.
Speaking in a live broadcast on private broadcaster Kanal 7 on Nov. 15, Şimşek said the process was being managed on the principles of transparency, efficiency and fairness, stressing that no public funds had been used for payments to fund investors.
Şimşek recalled that 131 funds managed by seven portfolio management companies were placed under liquidation on Sept. 17. The funds had approximately 456,000 individual investors.
“The payments are being made very quickly and transparently,” he said.
Şimşek said the Capital Markets Board (SPK) is also examining shares held by the funds that had been subject to abuse and manipulation in recent years.
He said 25 inspectors had been transferred from the Treasury and Finance Ministry to the SPK and that the examinations would be completed by the end of the month.
Following the reviews, criminal complaints would be filed against people found to have engaged in market-disrupting activities, while any illicit gains would be identified, he added.
Şimşek also said the fund issue had coincided with a decline in global stock markets.
“Yes, there has been a loss of value on the stock market. However, stock markets in emerging economies declined by an average of 8 percent during the same period, while Türkiye’s stock market fell by 9 percent,” he said.
People with savings in money market funds or other funds whose money remained invested may have experienced difficulties accessing liquidity, Şimşek said, adding that the liquidation process had resolved the issue.
“Banks hold only 1.3 billion Turkish Liras in these funds, corresponding to 0.002 percent of their total holdings. There is no possibility of this crisis spreading to the banking sector,” he said.
“In the past, an incident like this in Türkiye would have caused an increase in the exchange rate. There has been no significant rise in dollarization. Money withdrawn from the funds is being paid in Turkish liras, so there has been no dollarization,” Şimşek also said.
Şimşek said Türkiye had introduced taxes on all funds without distinguishing between domestic and foreign investors.
Some foreign funds had sold their shares and withdrawn their savings because of the latest developments, he said.
“We have long said that we do not want carry trade. We introduced taxes, while the Central Bank cut interest rates, making carry trade less attractive,” he said.
Şimşek said the authorities had investigated allegations of capital outflows but found no unusual movement.
He said money could leave the country through three channels: SWIFT transfers, crypto assets and electronic payment institutions. The authorities examined all three channels and found that outflows between Sept. 1 and Sept. 16 were entirely related to foreign trade, he explained.
The authorities also examined the first 16 days of each of the first nine months of the year before the fund issue emerged, he noted. Şimşek said $14.7 billion and 7 billion euros had been transferred through SWIFT, with all transactions linked to imports. “There was no difference between those figures and the payments made in September,” he added.
Şimşek said the government had also investigated claims that $8 billion had been transferred abroad through crypto assets.
“We examined the entire year. The total amount of crypto assets in Türkiye is $4 billion,” he said.
According to an examination by the Financial Crimes Investigation Board, or MASAK, the amount transferred through other channels was not even $200 million, he added.
Şimşek said he would travel to the G20 summit in mid-December before proceeding to New York for talks with MSCI’s senior management.
He said he would also meet global investors concerned about the issue and hold discussions with them.
“A permanent reform will have taken shape by mid-December,” Şimşek said.
MSCI suspended certain changes to its Türkiye indexes and warned that the country’s emerging-market status could be reviewed unless sufficient progress is made by June 2027.
