Başçı emphasizes importance of bank's independence
May 08, 2014 - 12:00 am GMT+3
May 08, 2014 12:00 am
ISTANBUL — The Governor of the Central Bank of the Republic of Turkey (CBRT) Erdem Basçı delivered a speech on Wednesday during a panel titled "New Opportunities for Growth" at the Financial Times Turkey Summit in Istanbul.
Basçı stated that there is a consensus in Turkey about problems facing the Turkish economy and solutions that should be implemented to address them. In his address Basçı also commented on interest and inflation rates. "Turkey gained positive momentum in gross domestic production (GDP) over the last 10 years. As of 2012, the ratio of per capita income to GDP climbed from 20 percent to 32 percent. This demonstrates a convergence with Europe. Is this a trend that will persist in the future?" Basçı asked. "I cancomfortably say that it will. It is very difficult to make predictions for 10 years down the road. Yet, the convergence with Europe will continue," the Central Bank chief continued. Başçı stated that the CBRT has contributed to financial stability as it is responsible for exchange price stability. He added that Turkey has been highly sucseptible to inflation for nearly 35 years and paid a heavy price for it.
Başçı noted that inflation has obstructed growth in Turkey but the CBRT has done what it can to eliminate it by reducing the inflation rate to single-digit figures. "We think that single-digits inflation rates are not enough. We plan to reduce more. That is what we have to do for financial stability. The central bank is one of the institutions responsible for financial stability.
In response to a question regarding the "interest lobby," a term used by Turkish Prime Minister Recep Tayyip Erdoğan to describe national and international fund heads and bank managers who profit from high interest rates in Turkey, Başçı replied, "Both short-term and long-term real interest rates are at a positive level. I always try to be cautious about political matters. The ones who want lower interest rates are credit users while the ones who want higher interest rates are savers. Those who want a higher value for the Turkish lira are importers. Likewise the ones who want a lower value for the Turkish lira are exporters. Hence, each and every Turkish citizen has the right to lobby.
Everyone can lobby in line with their demands both for interest rates and the level of exchange rates.
The same applies for politicians as well. As long as the central bank regards short-term interest as a kind of instrument and tries to reduce the risk and ensure stability, then the right structure will be