Former US-based bank executive to lead Turkey's Central Bank

Source: Washington Post

Turkish President Recep Tayyip Erdogan on Friday appointed a former U.S.-based bank executive to head Turkey’s central bank, in another sign that his administration might pursue more conventional economic policies.

Erdogan named Hafize Gaye Erkan, a former co-chief executive officer of the First Republic Bank, as governor, according to an announcement in the Official Gazette. The Princeton-educated Erkan, 41, becomes the Turkish central bank’s first woman governor.

Erdogan won a third presidential term in elections last month as the country grapples with a cost-of-living crisis fueled by inflation that peaked at a staggering 85% in October.

Critics blame the turmoil on Erdogan’s policy of lowering interest rates to promote growth. The approach runs contrary to conventional economic thinking that calls for rate increases to combat inflation.

On Saturday, Erdogan reappointed Mehmet Simsek, a respected former banker, finance minister and deputy prime minister, to the post of finance and treasury ministry. Simsek returned to the Cabinet after a five-year break from politics.

Simsek and Erkan’s appointments are seen as an indication that Erdogan may abandon policies that many economists have branded as “unorthodox.”

Erkan was a managing director at the Goldman Sachs investment banking company and worked at the now-failed San Francisco-based First Republic Bank, holding the post of co-CEO for six months in 2021.

She replaces Sahap Kavcioglu who oversaw a series of rate cuts since 2021. Kavcioglu meanwhile, was moved to head the country’s banking watchdog, BBDK.