Governor insists Central Bank is independent amid political pressure concerns

ISTANBUL

Turkey's central bank governor Erdem Basçı while addressing the general assembly of the bank in Ankara last April. REUTERS Photo

Central Bank Governor Erdem Başçı, speaking amid intense debates about political interference in the Bank, has insisted that the institution is taking its decisions “independently.”

“The Turkish Central Bank is independent both legally and in de facto,” Başçı said at the “Sustainable Mega Cities and Financial Hubs from New York to Istanbul” conference in Istanbul on June 13.

“Journalists, bankers, politicians, everybody can express their opinions and criticisms. The Bank is completely transparent. We listen and hear everybody, and take heed of what they say. We take decisions with seven members [of the monetary policy committee] after taking everybody’s opinion,” he added.

The Central Bank replaced five mid-level executives on June 11, following Prime Minister Recep Tayyip Erdoğan’s increasingly strident criticism of Governor Başçı’s strategy. The Central Bank Assembly decided to remove two director-generals, one deputy director-general and two directors, in its meeting on the afternoon of June 11.

The move came amid a wave of reshuffles in various state offices. Scores of executives at bodies including the banking and telecoms regulators and state TV have been fired since the start of this year, in what is seen as part of the government’s attempt to remove all followers of Islamic scholar Fethullah Gülen from state institutions. Erdoğan accuses Gülen of trying to bring down his government through the corruption probes of December 2013, which led to the resignation of three Cabinet ministers and the detention of businessmen close to the government.

Many of those who have been fired are believed to be associated with Gülen’s “Hizmet” (Service) movement, which runs schools and charities across Turkey and wields influence in institutions including the police, judiciary and regulatory bodies.

The latest dismissals at the Central Bank once again revived concerns over political influence on the institution, which have escalated due to Prime Minister Erdoğan’s strong verbal attacks on its monetary policy.

The Central Bank, which ramped up rates in January to defend the plunging Turkish Lira, cut them for the first time in a year last month despite stubborn inflation, weeks after Erdoğan called for such a move.

Erdoğan later said the bank’s 50 basis point cut in its one-week repo rate, the main rate at which it currently funds the market, had not been enough.