Turkish President Recep Tayyip Erdogan has made a strategic appointment by selecting Professor Fatma Ozkul, a renowned expert in crypto assets and blockchain technology, to the monetary policy committee of the country's central bank. This appointment, as reported by Bloomberg on December 22, brings a new dimension to the committee. Ozkul has been an academic at Marmara University in Istanbul since 2012, focusing on accounting, finance, and auditing. Notably, her research also delves into blockchain technology and digital assets, and she is the author of a 2022 book on the accounting of cryptoassets.
Ozkul's induction into the monetary policy committee comes at a crucial time. The committee's primary role is to determine benchmark interest rates to manage inflation. Facing an inflation rate that soared to 61.98% in November, the committee recently increased Turkey's interest rate by 2.5 percentage points, bringing it to 42.5% as of December 21. This move aligns with the broader economic strategy set by Erdogan, who, after winning the election in May, reshaped the economic team and appointed former Goldman Sachs banker Hafize Gaye Erkan as the governor of the central bank. In 2022, the bank also conducted successful preliminary trials of its digital currency, the “Digital Turkish Lira.”
The economic landscape in Turkey has been a catalyst for the growing adoption of cryptocurrencies. According to a Chainanalysis report, Turkey ranks fourth globally in terms of raw cryptocurrency trading volume. Between July 2022 and June 2023, the country saw a transaction volume of approximately US$170 billion, trailing only the United States, India, and the UK. In light of this surge in cryptocurrency trading, Turkish authorities are reportedly planning to regulate the cryptocurrency market, focusing on licensing and taxation. This move aims to address the Financial Action Task Force’s (FATF) concerns and potentially remove Turkey from its “grey list.”
The anticipated regulations are poised to introduce specific licensing requirements to safeguard the system from misuse. These regulations are expected to encompass a wide range of measures, including setting capital adequacy standards, enhancing digital security, offering custody services, and implementing reserve verification processes.
With these developments, Turkey is positioning itself as a proactive player in the evolving landscape of digital finance. The appointment of Ozkul to the central bank's monetary policy committee reflects a recognition of the importance of expertise in digital assets and blockchain technology in shaping modern monetary policy and financial regulation. As the country navigates high inflation and a shifting economic environment, these steps could be pivotal in establishing a more stable and innovative financial ecosystem.
