Hafize Gaye Erkan responds to the 'where is the 128 billion dollars' question

Central Bank Governor Hafize Gaye Erkan responded to lawmakers' questions regarding 'where is the 128 billion dollars' at the TBMM Planning and Budget Committee.

SHE CLARIFIED 110 BILLION DOLLARS OF THE AMOUNT

Emphasizing the “period before me”, Erkan stated that 60 billion dollars of the foreign exchange reserves went to companies and 50 billion dollars to individuals. While Erkan did not provide detailed information on which companies and individuals acquired the foreign currency at what exchange rates, she has not yet clarified what happened to the remaining 18 billion dollars. She continued her remarks as follows:

“I would like to answer technically. Because as a technocrat, this is what I can do. In 2020, compared to 2017, the real sector's foreign currency position improved by approximately 60 billion dollars, while household foreign currency deposits increased by approximately 50 billion dollars. In the same period, the portfolio of non-residents decreased, and a current account deficit was recorded, excluding 2019. The reflections of these developments on the CBRT position (reserves) have been observed. The mathematics of this is clearly evident.”

'I CANNOT DEEM A DEBATE LIKE "WHAT HAPPENED TO THE RESERVES" SUITABLE FOR OUR INSTITUTION OR TURKEY'

Governor Gaye Erkan stated that after taking office, she looked into the past and examined the 128 billion dollar issue, adding, “I would like to share what saddens me,” and said, “There is an understanding as if the foreign exchange reserves at the CBRT were transferred to certain institutions and individuals in a secretive manner. As a child of Turkey, in an age where communication and information technologies are so advanced, I cannot deem a debate like 'What happened to the reserves?' in an institution as open to the world as the Central Bank suitable for our institution or for Turkey.”

WHY WAS FOREIGN CURRENCY LIQUIDITY PROVIDED TO THE MARKET?

Governor Erkan stated that the transaction had a legislative basis and was carried out within the framework of the protocol signed between the Treasury and the Central Bank at that time, adding, “By providing foreign currency liquidity to the market, efforts were made to prevent unhealthy pricing and exchange rate volatility that could arise from the impact of capital flows turning negative towards Turkey, and their effect on inflation.”