Turkish Central Banker is Social Scientist with Roots in Islamic Finance

Turkey has appointed Murat Cetinkaya, an Islamic banker, as its new head of the Central Bank. REUTERS/Umit Bektas/Files

By Asli Kandemir

ISTANBUL, April 14 – After winning the backing of President Tayyip Erdogan, Turkey’s new central bank governor must now convince investors that an Islamic banker without formal training in economics can tame inflation while resisting political pressure to cut rates.

Turkey’s cabinet on Monday approved Murat Cetinkaya as the next central bank head, giving some initial relief to investors who had feared a battle between Erdogan, who equates high interest rates with treason, and Prime Minister Ahmet Davutoglu’s more orthodox economic team.

Despite the initial relief in markets, the 40-year-old Cetinkaya remains something of an unknown quantity, lacking the experience of his predecessor, Erdem Basci, an engineer turned economics Ph.D. whose term as governor expires next week.

Described as “low-key” and “determined” by those who know him, Cetinkaya studied international relations and sociology at Istanbul’s prestigious Bosphorus University. He holds a masters degree in social sciences from the same school, where he is several years into a doctorate in politics.

As a banker, his career has been spent in Islamic finance, which prohibits the charging of interest. Erdogan, a pious Muslim, has worked to develop Islamic banking in Turkey.

Since June 2012, Cetinkaya has been a deputy governor at the central bank. Analysts said his background made him a likely pick for Erdogan, given the president’s scepticism of the West and its education and value systems.

“Let’s be realistic. We will never have a governor who has been educated at an Ivy League university in the U.S. or has worked as manager at a big non-state bank,” said Atilla Yesilada, an analyst at Global Source Partners, a consultancy.

“Given these restrictions, it is a comfort that he knows the monetary policy board. And he will likely to go down the same route. It has yet to be seen how Cetinkaya will handle political pressure, which his predecessor had to manage frequently.”


Erdogan, who favours consumption growth, has repeatedly railed against high interest rates, saying that they cause higher inflation, a stance at odds with orthodox economics.

Basci’s reluctance to cut rates had drawn repeated criticism from Erdogan. Last month the central bank kept its main interest rate on hold for the 13th consecutive month, but cut its overnight lending rate, the upper band of its “rate corridor”, a move some economists saw as a sop to political pressure.

With inflation running around 7.5 percent according to the latest data, the central bank has consistently missed its inflation target of 5 percent over the last five years.

Basci, a respected academic who has published papers in international journals, was the architect of Turkey’s complex interest rate corridor, which uses a system of multiple rates and is aimed at achieving price stability and financial stability simultaneously.

Yet even Basci was seen an unable to completely resist government pressure.

“While it would be unfair and premature at this stage to treat Cetinkaya as Erdogan’s lackey, there are plenty of reasons to doubt whether he will be able to face down the government” said Nicholas Spiro, a partner at London-based Lauressa Advisory.


Despite his career, Cetinkaya has soldiered on with his academic work, said his dissertation adviser, Gul Sosay, an assistant professor of political science at Bosphorus University.

She described him as “quiet and determined”, adding that his dissertation topic of financial regulation was something of a departure from standard politics research.

“He is very kind, a quiet and determined person. He has not quit the programme despite his very busy work schedule,” Sosay told Reuters. “Even though we wanted to pull him more down to the realm of politics he insisted to have an economic aspect in his research.”

Since joining the central bank he has kept a relatively low profile.

“He seems to have been avoiding public appearances therefore we have not seen him in many events contrary to other members of the monetary policy committee,” said one of his central bank colleagues, who spoke on condition of anonymity.

In one his rare public speeches, Cetinkaya gave a keynote address at an Islamic Finance conference in November 2015. In fluent English, he emphasised the importance of fiscal discipline and reforms to reach low interest rates.

Cetinkaya will take over his new post from Basci on April 19. He will chair the first interest rate meeting on April 20 and will probably make his first public appearance as the governor on April 26 to announce quarterly inflation report.

Already, the government’s spokesman has hinted that Cetinkaya’s remit is to support growth.

“Cetinkaya will pursue his responsibilities in line with Turkey’s 2023 targets,” Numan Kurtulmus said on Monday, referring to Erdogan’s targets to make Turkey among the world’s top ten economies by the centennial of the Turkish republic’s founding.

The low-key Cetinkaya looks unlikely to draw attention to himself, said his colleague at the central bank.

“In his new capacity, he will likely to listen to his colleagues more and is unlikely to have a sharp tongue.”

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