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These are tense times for Turkish bankers. The five-year term of Durmus Yilmaz, the country’s central bank governor, ends on April 18th. His successor, announced on April 14th, is Erdem Basci, a long-standing deputy governor. The change at the top comes as the risks to Turkey’s economic and financial stability are rising, not least due to a ballooning current account deficit fuelled by a credit-driven surge in domestic demand.
The appointment of Mr Basci ensures continuity at the central bank, but since he is seen as close to deputy prime minister Ali Babacan worries are surfacing about the extent of the central bank’s independence from the government. The unorthodox two-pillar approach adopted by Turkey’s central bank since December has combined steady increases in banks’ reserve requirements at the same time as reductions in short-term interest rates. Although government ministers have commended these policies, Turkey’s bankers complain that recent measures unduly punish the industry.
Read more at Financial Services Briefing: “Changing of the guard” (April 14th)