ANKARA, (Reuters)- Turkish President Ahmet Necdet Sezer on Monday, May 28, ratified a key law reforming the country's ailing banking system as part of measures promised to the International Monetary Fund (IMF) in return for loans.
The president's internet site said the head of the state had signed the law and sent it for publication in the official gazette on Tuesday.
Turkey, which was hit badly by a financial crisis in February, has won billions of dollars of loans from the IMF on the condition that it implements crucial economic and structural reforms, particularly in the banking system.
Turkey's banks were at the heart of the financial crisis that forced the government to abandon an IMF-backed currency peg in February and float the lira, which subsequently lost as much as 40 percent of its value against the dollar.
The law aims to speed up consolidation in the sector and strengthen penalties for abuse of bank funds. It tightens up regulations governing private banks, accelerating legal proceedings for troubled banks taken over by the watchdog's Savings Deposit Insurance Fund.
The Fund has taken over 13 troubled banks and pledged to sell or close them as part of the reforms. Analysts predict further consolidation after the reform law comes into effect.
Last minute nerves about a hitch in the banking law had contributed to a slump on the Istanbul stock exchange on Monday. Sezer, a former constitutional court judge, has in the past vetoed several laws on technical grounds and there were fears the banking law might go the same way.
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