The new governor of the Turkish Central Bank
has officially taken up his role.
Erdem Basci was previously deputy governor of
the Turkish central bank for eight years and is taking over the
post from Durmus Yilmaz, who served since 2006.
In 2006, Basci fell short of becoming governor
when the then-president, the secularist Ahmet Necdet Sezer, vetoed
against his appointment because of Basci’s close ties to the more
theocratic AK Party.
The Turkish central bank is trying to fend off
the inflow of hot money – short term capital from foreign
investments – to prevent the economy from overheating and
The central bank has thus kept interest rates
at the historically lowest level of 6.25% since January, while
simultaneously raising the reserve capital requirements for banks
to 15% for demand deposits, notice deposits and private
current accounts – forcing banks to issue out fewer loans in
order to restrict domestic credit demand.
Turkey’s approach is similar to China’s, whose central bank raised the reserve
capital ratio to 25% on 17 April.
RBI is running a series on
Turkish banks’ strategy in 2011.