The Central Bank debate in the politics

While the impact of the Central Bank Governor Naci Agbal’s dismissal continues on the economy, notably on foreign exchange (FX) rates, the management change has also become a key issue in politics. Agbal was dismissed from his post before he completed five months. The opposition parties proposed legal regulations and setting the term of office for 5 years in order to prevent dismissals. Republican People’s Party (CHP) Leader Kemal Kilicdaroglu announced ‘emergency confidence building measures’ consisting of 9 items stated that a crisis of confidence is now shaking the markets. The 9-item proposal notes specifically that there should be a guarantee that there will be no political intervention in independent institutions, especially in the Central Bank.

In accordance with Kilicdaroglu’s proposal, the Central Bank governor and all members of the Monetary Policy Committee (MPC) should be dismissed. A reliable figure both in domestic and foreign public opinion with Central Bank origin, if possible, should be appointed to the governorship. The new governor should choose his deputy governors and MPC members, with whom he can coordinate, except one member to be appointed by the government. Reasons, buyers and methods of sales of the Central Bank’s reserves, which have been sold since March 2019, should be explained. The terms, facilitating the dismissal of the Central Bank governor and included in the current legislation in the recent period, should be removed. It should be ensured that the governor will not be dismissed from the post by the President or other authorities for at least for 5 years. Along the same line, the chairman and members of the Board of the Banking Regulation and Supervision Agency (BDDK) should immediately be changed. Members based on merit should be appointed to their seats.

ORGANIZATIONAL STRUCTURE SHOULD BE REBUILT

IYI Party will submit a 1-item legislative proposal regarding Central Bank governor appointments for 5 years and their immunity from dismissal in this period, according to the Party’s statement. IYI Party’s economy staff warned of the necessity of rebuilding of the Central Bank’s organizational structure.

WHY WAS AGBAL DISMISSED FROM HIS POST?

IYI Party Parliamentary Group Chairman Ismail Tatlioglu stated that President should share with the public the reason for Naci Agbal’s dismissal and the underlying reasons of this decision. “We have information that the Central Bank governor was dismissed from his post because he wanted to share how USD 128bn worth of FX reserves ‘melted’ the with the public. We received more information that this demand was made so that Central Bank policies will be more efficient,” said Tatlioglu.

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