Erkan’s selection comes two days after Mehmet Simsek was sworn in as the new finance minister. The appointment of Erkan and Simsek signals a shift in economic policies under the supervision of President Recep Tayyip Erdogan.
Erkan, 44, who has a doctorate in financial engineering from Princeton, has held several positions of high calibre in the past, including managing director and head of financial institutions at Goldman Sachs, and the CEO of the First Republic Bank that collapsed earlier this year. She is the fifth governor of the central bank under the presidency of Erdogan.
Erkan replaces Sehap Kavcioglu, a columnist who was appointed by Erdogan after penning strong criticism of his predecessor’s decision to hike interest rates. Kavcioglu started cutting interest rates in response to the lira losing value. However, the policy further worsened soaring inflation and the value of the lira. Under Kavcioglu's governance, Erdogan was slammed for interfering with the central bank's independence.
The interest rate stands at 8.5 percent as the Turkish lira keeps hitting all-time lows. One US dollar traded for 23.49 liras on Friday.
In May, net foreign reserves of the central bank dropped into negative territory and the annual inflation rate was announced as 39.59 percent, according to Turkey’s statistics body.
Following his win in the presidential elections in May, Erdogan promised to improve the economy and signaled a pivot away from his unorthodox policies of the past, beginning with returning Simsek to the role of finance minister.
During the ceremony to handover power, Simsek emphasized the need to return to more “rational economic policies.” His comment was hailed as a new start for Turkey to regain economic stability.
