Islamic finance expert to take top role in Turkey bank

Ankara / Reuters

Turkey’s central bank will promote the head of its markets division to deputy governor, officials announced, elevating another banker with Islamic finance credentials to its policy-setting committee.
Erkan Kilimci is due to be named as one of the bank’s four deputy governors shortly, the officials said, declining to be identified because the information has not yet been made public.
One of the deputy governor positions was vacated last week when Murat Cetinkaya was promoted to governor, replacing Erdem Basci whose five-year term had ended. Another deputy governor, Turalay Kenc, is serving the last day of his five-year tenure on Friday.
Officials for the central bank could not be reached for comment.
Like his new boss, Kilimci is a 40-year-old graduate of the political science and international relations department of the prestigious Bosphorus University, according to information on his LinkedIn profile and the Istanbul bourse website.
And like Cetinkaya – the first Islamic finance specialist to become central bank governor in modern Turkey – Kilimci’s resume includes practical experience, having worked on Turkey’s first Islamic Exchange Traded Fund (ETF) and some early Islamic bond issuances.
While Turkey is constitutionally secular, President Tayyip Erdogan is committed to expanding the Islamic finance sector — partly out of religious conviction, and partly to boost the country’s role as a Middle Eastern financial hub.
What concerns investors, though, is whether the central bank’s new top management can withstand pressure from Erdogan and the ruling AK Party to cut interest rates further, even as inflation remains above target.
“Cetinkaya was appointed governor partly because he had the right background as far as the ruling AK was concerned, so it’s not surprising that his new team has a similar background,” said Nicholas Spiro of Lauressa Advisory in London.
“What matters is whether the new team will have the resolve to face down the government and tighten monetary policy significantly if and when sentiment deteriorates sharply.”
Erdogan, who favours consumption-led growth, has repeatedly railed against high interest rates, equating them with treason. He also says high rates cause inflation, a stance at odds with orthodox economics.