/ 12 July 2019

Editorial: Bank woes – but not in SA

Editorial: Bank Woes – But Not In Sa

Turkish President Recep Tayyip Erdogan fired his country’s central bank governor, Murat Çetinkaya, last Saturday. Days later he launched a scathing attack on the former governor, describing him as “our colleague who wouldn’t follow instructions”.

The president noted that a new system of governance that came into force last year had awarded him authority to “intervene” in the bank, according to a Financial Times report. “From now on, the central bank will provide stronger support for our economic programme,” Erdogan said.

The decision to sack the governor confirmed some of the worst fears about Erdogan’s control over the country’s policies, and the erosion of independence at the central bank.

But the most striking aspect of Erdogan’s remarks on the matter was his confirmation that it was his son-in-law, Finance Minister Berat Albayrak, who had spearheaded the removal of the central bank governor. “Our colleagues, notably the treasury and finance minister, carried out an assessment. After this assessment, we decided that a change would be beneficial,” he said.

Erdogan claims that there was a difference of opinion on interest rates that had informed the decision to sack the former governor. Whatever it was, Turkey is in some trouble and has been for more than a year now after a currency crisis wiped 30% off the value of the lira.

We have our own problems in South Africa — not least a fashionable debate over the role and independence of the Reserve Bank. So it’s some consolation that the president doesn’t have his son-in-law running the treasury. And also that he’s renewed the contract of Lesetja Kganyago.