Aug 08 2019

Turkish central bank purged of senior staff by new governor

After sacking central bank governor Murat Çetinkaya last month for refusing to acquiesce to the president’s demands to lower interest rates, the Turkish government has dismissed all of the general managers appointed by the former governor, German state news outlet Deutsche Welle Turkish reported on Thursday.

A large number of deputy general managers and managers have also been transferred from their roles, Aslı Işık’s news report said.

The staff were brought to their management roles by Çetinkaya when he was appointed governor in 2016.

However, economist Uğur Gürses said, many of those names had spent decades at the central bank.

“These appointments can’t be evaluated as if they're from the previous period, these are an attempt to uproot the central bank system. Ali Çufadar and Orhan Kandar (two of the sacked general managers) had been at the bank since 1988, they started from scratch at the bank”, Gürses told DW.

Çetinkaya faced serious challenges over his period at the helm of the bank, including a disastrous economic year in 2018 when the lira lost 28 percent of its value against the dollar and inflation peaked at nearly 25 percent.

The governor’s intervention to hike the benchmark interest rate by 625 basis points last September is credited by many with preventing a full-blown financial crisis in Turkey.

However, President Recep Tayyip Erdoğan is well known for his unorthodox belief that high inflation is best tackled by lowering interest rates.

Çetinkaya was sacked last month, a year before his term was due to end, after refusing demands from the president to lower interest rates.

The bank’s vice governor, Murat Uysal, replaced Çetinkaya and slashed the benchmark rate by 425 basis points in the first fiscal policy meeting in late July.

“The central bank has already lost its institutional independence, and there’s a project on the go to move the bank to Istanbul from Ankara. It’s at bit like they’re trying to change horses while crossing a stream – it’s not at all within reason”, said Gürses.

https://www.dw.com/tr/merkez-bankas%C4%B1nda-deprem/a-49953382