The Rise of Hafize Gaye Erkan, Turkey’s First Female Central Bank Chief
Hafize Gaye Erkan has been appointed as the new head of Turkey’s central bank, making her the country’s first female central bank chief. Erkan previously worked at Goldman Sachs advising financial groups on stress tests of their balance sheets before becoming co-chief executive of First Republic, which recently collapsed and was sold to JP Morgan.
Erkan’s appointment comes at a time of economic turmoil in Turkey, with investors deeply concerned about the state of the country’s balance sheet. Erkan is known for her expertise in creating complex models that analyze risk in the balance sheets of large financial institutions. This contrasts with the radical economic views of Turkish president Recep Tayyip Erdoğan, who has been known to call interest rates “the mother and father of all evils” and insists that high borrowing costs cause rather than cure high inflation.
Erkan’s job is both difficult and easy according to former chief economist at the central bank, Hakan Kara. It is difficult because she inherited high inflation and an ineffective set of regulations to relax. But it is easy because given the unusually low credibility of her predecessor, Erkan can improve market sentiment very quickly by sticking to central bank basics.
Erkan’s Appointment Brings Hope for Economic Stabilization
Erkan’s appointment has brought hope for economic stabilization in Turkey. However, her job is not going to be easy since there are many challenges to overcome. For instance, interest rates will have to be raised substantially, at the June 22 central bank meeting, if not before to restore rational policies in the country according to finance minister Mehmet Şimşek. Also, Erkan will have to balance putting Turkey on a more sustainable political path and attracting foreign investors while placating a president who has shown little patience with conventional economic policy.
Rebuilding Turkey’s Central Bank
Erkan will have to rebuild Turkey’s central bank after years of mismanagement, purges, and demotions. Like most other key institutions in the country, the central bank lost its independence and was gutted by Erdogan’s drive to centralize power. Erkan will have to use her diplomatic skills as she navigates the Turkish, English, and German-speaking terrain to bring about the necessary reforms needed to rebuild Turkey’s central bank.
Erkan’s Roots
Erkan’s quantitative skills were developed by her parents, a professor of physics and mathematics, and an engineer who taught her C++, a programming language, from an early age, in exchange for making Turkish coffee. After graduating with an industrial engineering degree from Boğaziçi University in Turkey, Erkan went on to obtain a doctorate in financial engineering from Princeton University, where she wrote her thesis on risk management.
Erkan’s Career
Erkan started her career at Goldman Sachs, where she advised financial groups on stress tests of their balance sheets. She then went on to become co-chief executive of First Republic, which recently collapsed and was sold to JP Morgan, and co-head of Greystone, a commercial real estate firm in New York. Throughout her career, Erkan has been recognized as one of the most powerful women in finance, and she has used her expertise to create complex models that analyze risk in balance sheets of large financial institutions.
Erkan’s Philosophy
Erkan believes that “data is indisputable.” Regardless of your position, it can be bolstered by the power of numbers. Erkan’s roots in classical mathematical theories contrast sharply with the radical economic views of Turkish president Recep Tayyip Erdogan. But it is this difference in philosophy that makes Erkan specially suited to take on the challenge of getting Turkey’s central bank back on track.
Summary
Hafize Gaye Erkan has been appointed as Turkey’s first female central bank chief. Erkan’s expertise in creating complex models that analyze risk in the balance sheets of large financial institutions is expected to help stabilize Turkey’s economy, which has been in turmoil. Erkan’s diplomatic skills will be put to the test as she balances putting Turkey on a more sustainable political path and attracting foreign investors while placating a president who has shown little patience with conventional economic policy. Erkan’s roots in classical mathematical theories contrast sharply with the radical economic views of Turkish president Recep Tayyip Erdogan. However, it is this difference in philosophy that makes Erkan specially suited to take on the challenge of getting Turkey’s central bank back on track.
Additional piece: Why Gender Equality in Central Banking Matters
The appointment of Hafize Gaye Erkan as Turkey’s first female central bank chief marks a significant milestone in gender equality. However, she is not the first woman to lead a central bank, and she won’t be the last. Women have made significant progress in breaking through the glass ceiling in finance over the past few decades, but there is still a long way to go.
The Gender Gap in Central Banking
Central banking is one of the most powerful and influential institutions in the world, but women are still greatly underrepresented in this field. In 2020, just 14% of central bank governors worldwide were women. This shows that despite the gains made in other areas of finance, women have not yet achieved the same level of representation at the highest levels of central banking.
Why Gender Equality Matters
There are several reasons why gender equality in central banking matters. For one, it brings fresh perspectives and experiences to the table. Diverse voices lead to better decision-making, and the presence of women in leadership positions helps to break down gender stereotypes that have long been associated with the industry.
Additionally, having more women in leadership positions helps to create a more level playing field for future generations. When young women see other women in positions of power, they are more likely to believe that they too can achieve great things in their careers.
Gender equality also has economic benefits. Research has shown that companies with more diverse boards tend to perform better than those with less diversity. The same is true for central banking. When policies are made by a diverse group of decision-makers, they are more likely to meet the needs of the entire population and be effective in achieving their goals.
Final Thoughts
While Hafize Gaye Erkan’s appointment as Turkey’s first female central bank chief is a significant step forward for gender equality, there is still a lot of work to be done. Women are greatly underrepresented in central banking, and this lack of diversity can have negative economic consequences. By working to create more opportunities for women in central banking and finance, we can achieve a more equal and prosperous future for all.
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For years, Recep Tayyip Erdoğan has championed unorthodox economic policies, leaving investors deeply worried about the perilous state of Turkey’s balance sheet. This week, the Turkish president appointed a new head of the central bank. The course of Hafize Gaye Erkan? A specialty in creating complex models that analyze risk in the balance sheets of large financial institutions.
“The data is indisputable. Any position can be bolstered by the power of numbers,” the Princeton-educated former Goldman Sachs banker said in a biography published by First Republic, the recently collapsed U.S. lender where she was a top executive until the end. end of 2021.
Erkan’s roots in classical mathematical theories contrast sharply with the radical economic views of Erdoğan, who is in his fifth central bank governor since 2019. The Turkish president has called interest rates “the mother and father of all evils” and insists that high borrowing costs cause rather than cure high inflation.
Şahap Kavcıoğlu, the former central bank governor, cut rates from 19% to 8.5% in two years, a move that triggered an acute inflation crisis and put the pound under severe pressure.
The central bank has also burned about $25 billion in foreign exchange reserves this year, partly due to an attempt to stabilize the lira. This will leave Erkan with little wiggle room as she takes on the challenge of getting the bank back on track.
“I think Erkan’s job is both difficult and easy,” said Hakan Kara, a former chief economist at the central bank. “Difficult, because it inherited high inflation and an ineffective set of regulations to relax. Easy, because given the unusually low credibility of its predecessor, it can improve market sentiment very quickly, even sticking to central bank basics.
Born in Istanbul in April 1979, Erkan’s parents, a professor of physics and mathematics and an engineer, developed his quantitative skills from an early age. She learned C++, a programming language, from neighbors who ran a software group. “In exchange for making Turkish coffee, they taught me C++ and the joy of recursive functions,” she said in the First Republic biography.
After graduating in 2001 with an industrial engineering degree from Boğaziçi University in Turkey, Erkan went on to obtain a doctorate in financial engineering from Princeton University with a thesis on risk management.
The Turkish-American dual national then spent nearly a decade at Goldman Sachs, where she advised major financial groups on stress tests of their balance sheets. It was there that she met First Republic founder Jim Herbert, who eventually hired her in 2014 to manage the California lender’s investment portfolio and a key part of its risk management function.
Erkan quickly rose through the ranks at First Republic, taking on the additional role of Director of Deposits in 2016. In 2019, she was named one of the industry’s “Most Powerful Women to Watch” by American Banker. In the summer of 2021, Erkan was named co-chief executive of the First Republic and considered a leading candidate to replace Herbert at what was then one of America’s largest regional lenders.
But her tenure at the helm of the company was short and bumpy: Erkan was involved in a series of interactions with other senior executives described in previous Financial Times articles as “toxic”. She left the First Republic at the end of 2021.
The institution has since been at the center of the biggest US banking crisis since 2008. It faced a huge depositor rush following rate hikes that ultimately led to its collapse and a fire sale to JP Morgan. may’s beginning. This had repercussions for Erkan, who had played an important role in the bank’s risk management for several years before the crisis.
After leaving the First Republic, Erkan served a similar term as co-head of New York’s commercial real estate firm Greystone a year later, being appointed in June 2022 and departing in December of that year.
Now, as Turkey’s first female central bank chief, she will have another chance to put her experience in risk management to good use when it comes to executing what could be one of the biggest pivots. ever made by the bank.
Mehmet Şimşek, who was appointed finance minister last week, pledged to restore “rational” policies in the country. Economists and investors say that will require a huge hike in interest rates, at the June 22 central bank meeting, if not before.
“The message received and the expectations formed so far point to a strong signal of political transition, and June 22. . . meeting is in a critical position for its implementation,” says Enver Erkan, chief economist at brokerage Dinamik Yatırım Menkul Değerler.
The post of central bank governor will surely test Erkan’s diplomatic skills. Turkish, English and German speakers will have to balance putting Turkey on a more sustainable political path and attracting foreign investors, while placating a president who has generally shown little patience with conventional economic policy.
Erkan will have to “rebuild the [central bank] after years of mismanagement, purges and demotions,” says Wolfango Piccoli of consultancy Teneo. “Like most other key institutions, [the bank] lost its independence and was gutted by Erdoğan’s drive to centralize power.
https://www.ft.com/content/1ea9cf66-ca6b-453d-9e2a-e5ae15877a70
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