Hafize Gaye Erkan: Slow decline of the Turkish central bank under Erdogan?

Hafize Gaye Erkan: Slow decline of the Turkish central bank under Erdogan?

According to a report by www.rnd.de, Turkish head of state Recep Tayyip Erdogan appointed 44-year-old Hafize Gaye Erkan as governor of the central bank last June to combat the disastrous consequences of his low interest rate policy. Erkan raised key interest rates from 8.5 to 42.5 percent to tame inflation and slow the lira's fall. Nevertheless, inflation reached 65 percent in December and the lira continues to fall against the dollar.
According to reports in opposition newspapers and social media, Erkan and her family are accused of nepotism within the central bank. Her father, Erol Erkan, is said to influence personnel and administrative decisions and threaten employees. Her mother, Gamze, is also said to have offices, a company car and a holiday resort that is actually intended for employees. Erkan denies the allegations and plans to take legal action.
These allegations are another indication of the growing nepotism in Turkey under the Erdogan government. The external impact is catastrophic, as Erkan's most important task should be to repair the central bank's damaged reputation. The opposition has submitted a parliamentary question and is calling on Finance Minister Mehmet Simsek to comment. The government's silence is seen as a bad omen for Erkan's future at the helm of the central bank.

The political complications and the threatened dismissal of Hafize Gaye Erkan could lead to considerable uncertainty on the financial markets. Investors and analysts will question Turkey's political stability and the currency and stock markets could fall further. Furthermore, this could further reduce trust in the Turkish central bank and threaten the country's long-term economic stability. It remains to be seen how the situation will develop, but the current allegations against Erkan and the unclear political situation pose a significant risk for the financial markets.