Turkey names Gaye Erkan as first female Central Bank governor

ANKARA —  Turkish President Recep Tayyip Erdogan tapped US banking executive Hafize Gaye Erkan as the nation’s new Central Bank governor early Friday morning local time, in a move that highlights Erdogan’s efforts to stabilize the economy in line with conventional finance standards.

Erkan, 41, who will be the nation’s first-ever female central bank governor, has held high-level positions at US banking and finance institutions including Goldman Sachs and San Francisco-based First Republic Bank.

Her selection follows the appointment of Mehmet Simsek as new finance and treasury minister, signaling a major departure from Erdogan’s unorthodox economic policies amid an acute cost-of-living crisis and breakneck inflation. The Turkish Central Bank's net foreign reserves have fallen below zero for the first time since 2002, according to official data released in late May. The country’s year-on-year inflation stood at 39.59% in May. 

She will be the fifth central bank governor under Erdogan’s executive presidency, which saw major U-turns in monetary policy. Her predecessor, Sahap Kavcioglu, was a columnist at a pro-government newspaper who took the job after strongly criticizing the previous Central Bank governor’s decision to hike interest rates. Heeding Erdogan’s call, under Kavcioglu the bank slashed interest rates to as low as 8.5% despite soaring inflation. Critics have accused Erdogan's government of eroding the Central Bank’s independence and depleting its foreign exchange reserves in a bid to avoid a currency crunch amid a plunging lira. 

Erkan's appointment will likely reinstitute the Central Bank’s image as an independent economic player. Simsek, who enjoys international credibility like Erkan, stressed the need for a return to rational economic policies during his handover ceremony.

The two appointments are expected to help steer the country toward a more stable and predictable economic path. Turkey’s risk premium, which shot up over 700 basis points ahead of the May 14 general elections, fell below 500 basis points after Simsek’s appointment.

Erkan, who was named to the board of directors of the US financial services group Marsh & McLennan Companies last year, previously served on the board of directors for Tiffany & Co. from 2019 to 2021. 

The Princeton graduate was also a former co-CEO of the First Republic Bank, which collapsed early this year and was acquired by Goldman Sachs.

From the early 2000s to 2014, Erkan held various positions at Goldman Sachs, including managing director and head of its Financial Institutions Group.