Türkiye has a new head of the central bank. Erdoğan relies on the expert American financier Hafiz Gay Erkan. In the midst of an economic crisis, it must now change course on fiscal policy.
The Turkish Central Bank has a new head: Erdogan has appointed an American CFO, Hafiza Gay Erkan. The official nomination of the former First Republic Co-Chief Executive Officer and Managing Director of Goldman Sachs was published today in the Official Gazette.
Experienced financial expert
Erkan takes office just under a week after Erdogan signaled a move away from unorthodox fiscal policy by forming a new government.
Its sole mission is to change course and restructure fiscal policy after years of interest rate cuts and an ongoing economic crisis.
As the fifth head of the central bank in four years, she replaced Sahap Kavcioglu. He led Erdoğan’s policy of lowering interest rates, and he has now been appointed head of the state banking watchdog, BDDK.
Departure from Unconventional fiscal policy?
Previous Turkish fiscal policy deviated from general norms by lowering rather than raising interest rates to fight inflation despite very high inflation.
The cycle was prompted by President Erdogan, who calls himself an “enemy of interest” and wants to use cheap money to boost the economy. As a result, the value of the national currency, the lira, fell sharply, which in turn exacerbated the problem of inflation.
Turkey is forced to import many commodities and raw materials which are becoming more expensive due to the weak lira. Experts have warned that the economy is headed for turmoil if current policies continue as foreign exchange reserves run out.
new Economic team You must regain confidence
The Turkish president wants to restore confidence in the financial markets with a new economic team. He recently appointed renowned international expert Mehmet Şimşek as Minister of Finance in the new government. Cevdet Yilmaz was appointed vice president – he is also considered a representative of traditional economic policy.
Erdogan, who has been in power for 20 years, was recently sworn in for another term. The 69-year-old, who trailed partially in the polls, won 52.2 percent of the vote in the runoff.
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