Turkish central bank chief quits citing “smear campaign”

Turkish central bank chief quits citing “smear campaign”
Erkan quite likely had little idea of what she was in for when she took the job last June. / screenshot
By bne IntelliNews February 2, 2024

Turkey’s central bank governor Hafize Gaye Erkan on February 2 resigned, citing a local media “smear campaign”.

Appointed just eight months ago by the country’s newly re-elected President Recep Tayyip Erdogan in a new push to end the country’s longstanding and deep-seated economic crisis, Erkan announced her resignation on her personal X account. She pointed to an apparent defamation campaign against her and said she was resigning to protect her family, including her baby.

Her post on X referred to "a major reputation assassination campaign [that] has recently been organised against me". 

It added: "In order to prevent my family and my innocent child, who is not even one and a half years old, from being further affected by this, I have asked our President to pardon me from my duty."

The Turkish lira (TRY) weakened by 0.6% against the USD to around 30.5 in the evening hours after news of Erkan quitting spread.

Turkey’s new economy programme involves a sharp turn away from “Erdoganomics” in favour of more conventional policies. Treasury and Finance Minister Mehmet Simsek—like Erkan a former Wall Street banker and appointed by Erdogan around the same time that she was installed as Turkey’s first female central bank chief—said after the resignation that the economy programme would continue without disruption. The new central bank governor would be appointed with his suggestion, he said.

Erkan has faced claims that her father, Erol Erkan, is involved in the central bank’s affairs. He has even been accused of firing one staff member, despite not being an employee of the regulator. Erkan and her father have denied the allegations.

Last week, Erdogan implied that he would ignore tabloid “campaigns” against Erkan based on “astonishing gossip”.

Five days prior to Erdogan’s apparent defence of Erkan, bne IntelliNews reported on January 19 that she was threatening legal fisticuffs over the tabloid attack. This publication wrote: “If Erkan makes the mistake of exercising her legal rights, the ensuing trial will indeed deliver an entertaining episode. Yet it would not have any impact on the country's monetary policy or Erkan’s position at the helm. All we have here is another tabloid story that distracts from the tragedy that is modern-day Turkey.”

Greeted upon her appointment by media reports that sometimes described her as having earned a reputation in the US as a “financial whiz”, Erkan has had something of a rough ride of late in the Turkish public eye. It’s been partly her own doing. In December, she gave an interview in which she stated that after moving from the US to Turkey to take the helm at the central bank she'd opted to move in with her mother since Istanbul real estate prices were too high. This did not go down well with the great number of ordinary Turks who are unable to buy a property, or even meet rental prices, due to the country’s painfully high real estate prices amid rampant inflation.

Also in December, Erkan appealed to business to see the country’s new high rates strategy as a pain worth bearing on the journey to righting imbalances in the economy.

Soon after her appointment in June last year, media reports told how Erkan had been named in a US class action lawsuit brought by the City of Hollywood Police Officers’ Pension Fund against former officials of the failed First Republic Bank.

The Turkish Treasury and Finance Ministry released a statement after Erkan announced her resignation, saying her decision was “entirely personal and at her own discretion”. Erdogan “has full confidence and support in our economy team and our programme,” the statement added.