The Central Bank of the Republic of Turkey was one of the central banks that cut their policy rate in the said period. The rapid policy rate cuts on a global scale were accompanied by massive asset purchasing programs led by advanced economies and rapid balance sheet expansion. Meanwhile, the speed of asset purchases has outpaced the previous crisis. The objective of the financial policies introduced to provide liquidity to the banking sector was to protect the fiscal structure of the financial sector and to ensure credit flow to the private sector. Many central banks provided additional  4  liquidity to the banking system by lowering reserve requirements and easing capital and liquidity buffers. With the regulations introduced, existing loan payments of the real sector experiencing a halt in cash flows were postponed or restructured. We can analyze the fiscal policy measures under some main headings such as new credit channels and government guarantees for loans, tax exemptions and reductions, and direct expenditures. Incentives of this kind are widely used in all major economies. During the pandemic, countries supported their economies with direct public spending, other financial supports and incentives. In some countries, direct public expenditures were more widely used depending on the fiscal space, while in others, capital, credit and other liquidity supports were used. In advanced economies, public incentives exceeded 20% of their national income. For example, in the USA, the economic support provided via public spending and forgone revenues reached 25% of the national income.

In countries such as Italy and Germany, supports in the form of capital, credit and other liquidity were employed in addition to the fiscal policy. Meanwhile, in emerging markets, economies were supported by various measures, although these measures were more limited compared to advanced economies. With the rate cut decision we took at the Monetary Policy Committee Meeting on 17 March 2020, we announced our first set of measures geared towards countering the economic effects of the pandemic. These measures aimed to; (i) (ii) (iii) (iv)  enhance predictability by providing banks with flexibility in Turkish lira and foreign exchange liquidity management, offer targeted additional liquidity facilities to banks to secure uninterrupted credit flow to the corporate sector, boost cash flow of exporting firms through arrangements on rediscount credits, and boost the liquidity of the Government Domestic Debt Securities (GDDS) market. The uninterrupted and smooth functioning of financial markets, the credit channel and firms’ cash flows was essential to contain the adverse effects of the coronavirus. The measures taken boosted the financial sector’s liquidity and credit conditions, and the monetary transmission mechanism continued to function effectively. 5  In sum, we aimed to support financial stability and the post-pandemic recovery process by providing much-needed liquidity to the financial system and the real sector under appropriate conditions during the pandemic. Thus, we sought to minimize the long-term damage to production and employment that may be caused by temporary effects arising from the pandemic.