Large amounts of capital poured into Turkish lira assets, leaving policymakers in trouble: they must not only curb speculative short-term capital inflows, but also not cut off an important source of financial support for the local currency. Turkey's 37% benchmark interest rate has attracted foreign investment, and it is estimated that $75 billion has flowed into high-yield currency derivatives and money market funds. The government is considering taxing money market fund income to prevent rapid outflows of capital and avoid sharp exchange rate fluctuations. This type of tax will also affect domestic and foreign institutional investors.

Large amounts of capital poured into Turkish lira assets, leaving policymakers in trouble: they must not only curb speculative short-term capital inflows, but also not cut off an important source of financial support for the local currency. Turkey's 37% benchmark interest rate has attracted foreign investment, and it is estimated that $75 billion has flowed into high-yield currency derivatives and money market funds. The government is considering taxing money market fund income to prevent rapid outflows of capital and avoid sharp exchange rate fluctuations. This type of tax will also affect domestic and foreign institutional investors.