Turkey central bank fires its chief economist and other departmental heads

Central bankers continue to be under pressure and be ousted from their job. An Indian parliamentarian openly says he had asked the Finance Minister to sack RBI Governor without naming the person. He says the “RBI Governor was no good and should be sacked outright.”

However, the government anger on central bank is not limited to Governor or Deputy Governor. It could be hit at the central bank staff too. After all the staff was advising the senior team.

This is what we are learning from Turkey.

They just fired the the Governor, but were not happy. They have even dismissed its chief economist and several other departmental heads:

Turkey’s central bank has dismissed its chief economist, Hakan Kara, and some department managers, according to a document seen by Reuters, re-igniting concern about political interference in the institution one month after the sacking of its governor.

The decision was part of a reorganization to make the bank more effective, according to the document, and was taken at an internal bank meeting. It followed comments from President Tayyip Erdogan in July that the bank needed to be overhauled.

Also dismissed were the bank’s research and monetary policy general manager, Pinar Ozlu; markets general manager Orhan Kandar; and banking and financial institutions general manager Yavuz Yeter, the document showed. Kara and the general managers were all given the role of advisers.

“This move will further weigh on concerns around erosion of (the bank’s) institutional strength,” said Timothy Ash, head of emerging market research at Blue Bay Asset Management.

Kara was the backbone of the Central Bank of the Republic of Turkey research efforts and “the face of the CBRT for investors for almost two decades”, Ash said, adding his dismissal was a greater loss than the sacking of former governor Murat Cetinkaya.

The document did not identify a new chief economist, but named several people as being appointed to fill vacancies in the bank’s economics team after the changes. More than 10 people were dismissed in total.

The markets have not really reacted negatively following the ouster of the Governor. This article says markets love autocrats as they provide stability.

As autocrats around the world are well aware, emerging-market investors love stability. Give them a competent strongman with a dubious human rights record over a chaotic democracy any day. A notable beneficiary of this phenomenon in recent years has been Recep Tayyip Erdogan, Turkey’s authoritarian president. His firm grip on power – along with excellent demographics and a sturdy banking sector – has helped persuade investors to keep faith with Turkey through an attempted coup, successive stand-offs with Russia and the US, and last summer’s currency crisis. So far, so good for the Turkish economy – if not for the academics, journalists and others who have got on the wrong side of the regime. 


The Turkish economy has shown a remarkable resilience to cataclysmic shocks. What it may not be able to survive is the slow erosion of institutional credibility. 


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