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President Erdogan has appointed a young, internationally experienced financial expert Hafiz Gay Erkan as the new governor of the Central Bank of Turkey. Does this mean he is saying goodbye to unorthodox interest rate policy?
“Our time and our lives are limited, so we have to optimize everything we do,” Hafize Gaye Erkan told Bloomberg about a year ago. That sounds like her life motto. At the time, Erkan was about to join Greystone, a lender specializing in commercial real estate. It was almost inevitable that company founders took notice of Erkan—and that’s what makes her career extraordinary.
successful career
She was born in Istanbul in 1982. Apparently, her parents gave her a feel for numbers and an understanding of complex relationships: an engineer and math and physics teacher. After school, young Gaye quickly became one of the top students in his class at the prestigious Bogazici University. She came to the US on a scholarship to study finance and mathematics.
Your career will only go in one direction, up. One of the first, and especially the youngest, women, she ended up on the executive floors of First Republic Bank of the United States and later worked as an investment banker at Goldman Sachs. Incidentally, First Republic Bank ended up going bankrupt. Elkann’s perspective may also come from experience: “We’ve also learned that liquidity doesn’t necessarily equate to solvency.”
These are the intricacies of the financial world. Translated, this means: if a company has enough money now, that doesn’t mean it will in the future. When it comes to solvency — the ability to pay — it’s not enough in the economy if it’s just the way it is now. The company also has to give the impression that it will stay that way.
“Dream Team” Against High Inflation?
Gaye Erkan may not have just caught the attention of Turkey’s new finance minister, Mehmet Simsek, for insights like this. He himself is an investment banker by profession. The pair should now be a dynamic team rebuilding Turkey’s financial world and economy, as Simsek declared: “Turkey must return to rational foundations. The key to ideal prosperity is a rule-based, predictable Turkish economy.”
Simsek and Erkan have been described internationally as a dream couple in the economic arena, a “dream team” against Turkey’s high inflation. They may deserve early praise – but can Simsek and Erkan really turn Turkey around?
high expectations
Economics expert Arzu Odabasi warned on Turkish TV: “Of course a strong team will have a positive impact on Turkey and the economy, but I find such comments from abroad rather worrying. It is overloaded, plus too many expectations.”
In any case, a lot depends on the overall economic environment globally, not just regional ones, Erkan explained. In any case, she said a year ago that central banks alone would not be able to solve the problem: “What other tools are available to central banks? Not many.”
How much Erkann can do as Turkey’s new central bank head, and the extent of her options for action, also depends on what Turkish President Recep Tayyip Erdogan ultimately allows.