Rewritten title: Hafize Gaye Erkan, Former Co-CEO of First Republic, Appointed as Head of Turkey’s Central Bank.

Hafize Gaye Erkan Appointed as the First Woman Governor of Turkey’s Central Bank

In a turn of events, Hafize Gaye Erkan has been appointed as the first woman governor of Turkey’s central bank (CBRT) by President Recep Tayyip Erdoğan in his latest cabinet reshuffle. Erkan will have her work cut out for her as she assumes the position in the midst of Turkey’s impending currency collapse due to Erdoğan’s economic policies.

Erkan’s Career so far

Erkan had previously served as co-CEO and heir apparent to First Republic Bank founder, Jim Herbert, but abruptly resigned from the role after just seven months. Following this, she worked briefly as the boss of Greystone.

Erkan has a doctorate in financial engineering and will need to put all her skills to use in combating Turkey’s current economic crisis.

Erdoğan’s Economic Policies

Erdoğan’s economic policies, particularly his decision to continue stimulating the economy in the face of soaring inflation, have led both international investors and Turkish citizens to flee the lira. His argument that the best way to combat consumer prices is to maintain borrowing costs at as low a rate as possible has become his signature economic policy.

Lira-ization Strategy

The CBRT has blamed Turkish citizens for the high inflation rate, accusing them of preferring to buy and hoard gold, cryptocurrencies, and other fiat currencies rather than using the Turkish lira. Last year, the CBRT launched a dedicated “lira-ization” strategy to encourage the country to use its own currency.

Currency Reserves Exhausted

The CBRT plundered Turkey’s foreign currency holdings to prop up the lira before the presidential election, causing net international foreign exchange reserves to dip into negative territory for the first time in the last 21 years. With its coffers now depleted, the CBRT has allowed the lira to resume floating freely, leading to a rapid decline in its value.

Erkan’s Position

As the new governor of the CBRT, Erkan will need to rebuild trust in the lira and combat the currency collapse. However, the post of the central bank governor is notoriously fraught and comes with a built-in ejector seat for Erdoğan’s political convenience. If the AKP needs more interest rate cuts to boost growth for municipal elections next March, Erdoğan may make it difficult for Erkan to do her job successfully.

Conclusion

Erkan faces a tough challenge in her new role, as the Turkish economy continues to falter. However, her background in financial engineering and extensive experience in finance may be what Turkey needs to emerge from its current crisis.