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President Erdogan has appointed the young, internationally experienced financial expert Hafize Gaye Erkan as the new head of the Turkish central bank. Does that mean that he wants to say goodbye to his unorthodox interest rate policy?
“We all have limited time and life, so we have to optimize everything we do,” Hafize Gaye Erkan told Bloomberg about a year ago. It sounds like her motto in life. At the time, Erkan was about to join Greystone, a lender specializing in commercial real estate. The company founder almost inevitably takes notice of Erkan – that’s how remarkable her career has been.
Successful career
She was born in Istanbul in 1982. Apparently, her parents gave her a feeling for numbers and understanding of complex relationships: an engineer and a teacher of mathematics and physics. Immediately after school, young Gaye quickly becomes one of the best in her class at the renowned Bogazici University. She came to the USA on scholarships and studied finance and mathematics.
Your professional career only goes in one direction, up. As one of the first and, above all, youngest women, she ended up on the executive floor of the First Republic Bank in the USA, later with the investment bankers at Goldman Sachs. Incidentally, the First Republic Bank eventually went bankrupt. Erkan’s views may also come from such experiences: “We have also learned that liquidity is not necessarily synonymous with solvency.”
Those are the intricacies of the financial world. Translated, this means something like: If a company has enough money at the moment, that does not mean that it will be like that in the future. When it comes to solvency – i.e. ability to pay – it is not enough in the economy if that is only the case now. A company must also give the impression that it will stay that way.
“Dream Team” against high inflation?
Gaye Erkan probably didn’t just catch the eye of Turkey’s new finance minister, Mehmet Simsek, with such insights. He himself made a career as an investment banker. The two should now be an energetic team that is rebuilding the Turkish financial world and economy as Simsek announced: “Turkey must return to a rational basis. The key to the desired prosperity is a rule-based, predictable Turkish economy.”
Simsek and Erkan are described here and there internationally as the dream couple of the economy, as a “dream team” against the high Turkish inflation. They may deserve the advance praise – but will Simsek and Erkan really manage to turn things around in Turkey?
High expectations
Economics expert Arzu Odabasi warns of caution on Turkish television: “Of course, a strong team will have positive effects on Turkey and on the economy, but I find such comments from abroad rather worrying. It’s overloaded, combined with too many expectations. “
And anyway, a lot depends on the overall economic environment, on global, not just regional contexts, explains Erkan. In any case, a central bank alone, as she stated a good year ago, cannot fix it: “What instruments do central banks still have at their disposal? Not many.”
How much Erkan will be able to do as Turkey’s new central bank governor, how big her options for action are, also depends on what Turkish President Recep Tayyip Erdogan ultimately allows.