Period of market-friendly reforms starts in Turkey
We can describe the current period Turkey is undergoing as a quest for stability and democracy. Of course, the economy will be the most debated topic in this period. International credit rating agency Fitch is expected to announce Turkey's sovereign rating this weekend. Regardless of whether Fitch's decision will be positive or negative, it will not directly or indirectly affect the general balances of the Turkish economy. If it is negative, it is not true, at least at the moment, to say that the Turkish banking system will suffer depreciation in the capital adequacy ratio (CAR) and the system will face a new problem. Currently, the CAR average in the Turkish banking system is around 13 percent. Even if Fitch downgrades Turkey's rating, the ratio will not go below 12 percent on average. Moreover, we do not think that there will be an interruption in the flow of foreign direct investments to Turkey in the case of a downgrade.
Obviously, the Turkish banking system needs strong market-friendly reforms. We will rapidly carry them out. The most important task for Turkey is to intensify financial markets, introduce new financial instruments, and make independent regulatory and supervisory bodies more effective. Let us note that these steps will be taken soon after the Constitutional amendment referendum that proposes a presidential system for Turkey.
Turkey will pursue a new strategy in this period, just as the U.S. did after the 1929 crisis, in order to create a new market-friendly model.
When the Great Depression of 1929 broke out, the 31st president of the U.S., Herbert Hoover, was in office. The Republican president thought that the system would spontaneously get back on track in the face of the crisis. However, the crisis did not concern the financial system alone, but also engulfed the real economy and further intensified, revealing Hoover's eventual desperation. Thus, many large and small incidents that happened during and after the Great Depression brought an end to the Hoover administration and brought Franklin D. Roosevelt to power. Certainly, Roosevelt's New Deal policy was a lifesaver, both for the U.S. and all other countries affected by the crisis. The New Deal policy, which aimed for the reinvigoration of the economy and highlighted government expenditures in almost all respects, enabled the recovery and reconstruction of the U.S. economy. Another aspect of the New Deal that is not widely known, although it constitutes its core, is its systemic struggle with criminal economic structures that derailed the system.
As of 1935, Roosevelt's Keynesian economic policies were practiced thanks to new laws and newly established institutions that were previously prepared. For instance, general planning laws were enacted to regulate financial and banking systems, and relevant regulatory institutions were established, in addition to supervisory laws and institutions that were founded to ensure competition, regulate labor markets and prevent unemployment. Indeed, there was something paradoxical in this: On the one hand, the state provided employment by regulating the economy, and on the other, it smoothed the way for competition by struggling with monopolies. Therefore, it would not be appropriate to describe Keynes' policy prescriptions for that period and Roosevelt's New Deal policies as strictly statist policies. These policies made history as the multifaceted policies of renewal that were developed to overcome the crisis. Contrary to popular opinion, the New Deal period purified the
system of criminal organizations, money launderers and ill-gotten gains. In this regard, it was not a statist, but a completely market-friendly period.
In fact, this is what Turkey seeks and wants to do today and this can be defined as a new New Deal policy. After the end of the Cold War, Turkey became a strong alternative to the Middle Eastern regimes, which were ran by shaky and outdated dictatorships, as it tried to combine a major democracy and market economy with inclusive growth.
The presidential system, which will be voted on in the referendum, will turn these achievements into systemic and constitutional institutions independent of the political power.
This, beyond any doubt, will rapidly spoil the U.S. and the EU's clichés dating back to the Cold War. Let us acknowledge that this situation is an irreversible fact for anyone. I think the presidential system will be a new development and commonwealth model for the Eurasian region spanning from Eastern Europe to the Caucasus.
Turkey becoming a stable economic power in its region will also serve the U.S.'s interests. The regional peace and the end of the EU's crisis is a significant dynamic that will help the U.S. economy rapidly recover.
A period of market-friendly reforms will start in Turkey with the presidential system.
Obviously, the Turkish banking system needs strong market-friendly reforms. We will rapidly carry them out. The most important task for Turkey is to intensify financial markets, introduce new financial instruments, and make independent regulatory and supervisory bodies more effective. Let us note that these steps will be taken soon after the Constitutional amendment referendum that proposes a presidential system for Turkey.
Turkey will pursue a new strategy in this period, just as the U.S. did after the 1929 crisis, in order to create a new market-friendly model.
When the Great Depression of 1929 broke out, the 31st president of the U.S., Herbert Hoover, was in office. The Republican president thought that the system would spontaneously get back on track in the face of the crisis. However, the crisis did not concern the financial system alone, but also engulfed the real economy and further intensified, revealing Hoover's eventual desperation. Thus, many large and small incidents that happened during and after the Great Depression brought an end to the Hoover administration and brought Franklin D. Roosevelt to power. Certainly, Roosevelt's New Deal policy was a lifesaver, both for the U.S. and all other countries affected by the crisis. The New Deal policy, which aimed for the reinvigoration of the economy and highlighted government expenditures in almost all respects, enabled the recovery and reconstruction of the U.S. economy. Another aspect of the New Deal that is not widely known, although it constitutes its core, is its systemic struggle with criminal economic structures that derailed the system.
As of 1935, Roosevelt's Keynesian economic policies were practiced thanks to new laws and newly established institutions that were previously prepared. For instance, general planning laws were enacted to regulate financial and banking systems, and relevant regulatory institutions were established, in addition to supervisory laws and institutions that were founded to ensure competition, regulate labor markets and prevent unemployment. Indeed, there was something paradoxical in this: On the one hand, the state provided employment by regulating the economy, and on the other, it smoothed the way for competition by struggling with monopolies. Therefore, it would not be appropriate to describe Keynes' policy prescriptions for that period and Roosevelt's New Deal policies as strictly statist policies. These policies made history as the multifaceted policies of renewal that were developed to overcome the crisis. Contrary to popular opinion, the New Deal period purified the
system of criminal organizations, money launderers and ill-gotten gains. In this regard, it was not a statist, but a completely market-friendly period.
In fact, this is what Turkey seeks and wants to do today and this can be defined as a new New Deal policy. After the end of the Cold War, Turkey became a strong alternative to the Middle Eastern regimes, which were ran by shaky and outdated dictatorships, as it tried to combine a major democracy and market economy with inclusive growth.
The presidential system, which will be voted on in the referendum, will turn these achievements into systemic and constitutional institutions independent of the political power.
This, beyond any doubt, will rapidly spoil the U.S. and the EU's clichés dating back to the Cold War. Let us acknowledge that this situation is an irreversible fact for anyone. I think the presidential system will be a new development and commonwealth model for the Eurasian region spanning from Eastern Europe to the Caucasus.
Turkey becoming a stable economic power in its region will also serve the U.S.'s interests. The regional peace and the end of the EU's crisis is a significant dynamic that will help the U.S. economy rapidly recover.
A period of market-friendly reforms will start in Turkey with the presidential system.
Last Update: January 27, 2017 02:13