Central bank independence in Turkey: A neo-Gramscian analysis

Abstract

The Turkish state has been going through a neo-liberal transformation resulting from the strategic reorientation of state institutions in ways that enhance and facilitate the strategies pursued by market-oriented social forces. The reform that granted legal independence to the Turkish Central Bank (TCMB) in 2001 was an institutional turning point within the state structure in Turkey; this policy shift prohibited TCMB's granting of credits to the Treasury and other public institutions. Institutionalization of an anti-inflationary approach to macro-economic policy altered the power balance not only between different state agencies, but also between social groups in favour of financial interests that benefited from monetary stabilization. Rooted in a neo-Gramscian framework, this article explores the legal independence of the TCMB as a function of the market-oriented domestic social forces that emerged as a result of the process of neo-liberal globalization initiated in the 1980s. The article also emphasizes how the hegemonic unification of diverse identities and interests around the strategy of achieving price stability was crucial in the autonomy of the TCMB.