The upward trend in the volume of deposits under a government-backed scheme that safeguards Turkish lira deposits from depreciation has reached a new record, data from the banking watchdog has shown.

The scheme, unveiled in late 2021 and known by its acronym KKM, sought to keep dollarization at bay by encouraging people to keep their savings in lira through guarantees to compensate for losses from the decline of the national currency.

The volume of deposits under the scheme has reached about TL 1.78 trillion (more than $91.9 billion) in the week through April 7, marking a new record, according to the Banking Regulation and Supervision Agency’s (BDDK) weekly data.

The data showed that the amount rose by a whopping TL 75.8 billion in the week, compared to TL 28.2 billion in the week to March 31. It marked the highest weekly increase since the TL 85.3 billion seen in the week ending on April 1, 2022.

The increases followed a regulation that removed the scheme's maximum interest rate limit for domestic individual investors.

The regulation still stipulates that the interest rate offered to lira deposits as part of the scheme cannot be below the current policy rate of the Central Bank of the Republic of Türkiye (CBRT), but the upper limit has been removed.

Meanwhile, the central bank has been urging banks in recent weeks to avoid steps that could create demand for foreign currency and to instead focus on new targets that involve monthly conversions of up to 5% of foreign exchange deposits to lira, bankers said Thursday.

The monetary authority took steps last week to support its goal of boosting de-dollarization, raising the ratio of securities that banks must maintain if their lira deposits amount to between 50% and 60% of their total deposits.

While bankers estimate that almost all the sector is above or close to the newly determined 60% conversion rate, all banks still have monthly targets to convert forex into lira.

Encouraging the use of local currency in bank deposits is a cornerstone of the central bank’s "liraization" strategy.

Unveiled last year, the strategy, which the bank says is its integrated policy framework, seeks to stabilize the national currency.

The BDDK data showed that 58.85% of all bank deposits were held in the lira as of April 7, compared to 41.15% in foreign exchange.

The central bank in December said it aimed to lift the share of lira deposits to 60% of all deposits in the banking system by the middle of 2023.