The Foundation Process of the Central Bank of the Republic of Türkiye

Abstract

Central banks are one of the most important financial institutions that carry out the financing transactions of the state administrations. Central banks are institutions that produce money on behalf of the state and carry out monetary policies. The need for resources for war financing by governments has been influential in the establishment of central banks as joint stock companies in the world. The process, which is pointed out by the reasons why a central bank was not established or could not be established in the Ottoman Empire, clearly reveals the purpose of the establishment of the Central Bank of the Republic of Türkiye. In the historical development process, the Bank's basic duties and functions and its importance in the country's economy are clear. The duties of central banks have followed an increasing course throughout history. Unlike other banks, they were established to serve the public interest, not for profit. This study consists of two parts. In the first, the developments that prepared the establishment of the Central Bank will be examined together with the changes in the economic structure that started in the middle of the nineteenth Century in the Ottoman Empire. In the first years of the Republic, the Central Bank of Türkiye was established as a mixed-structured joint stock company with the law numbered 1715 on June 11, 1930, as a result of the search for a Central bank alongside the Turkish Economy and the Ottoman Bank, and the search for solutions that continued with the 1929 crisis. Laws and regulations enacted in 1970, 1983, 1990, 1999, and 2001 are excluded from this research. In the second part, the contribution of the Central Bank of the Republic of Türkiye to the economic development of the country, as mentioned in its establishment purpose, will be examined through the financial reports of the first 5 years in the process starting from 1932. 1933, 1934, 1935, 1936, and 1937 year-end reports and balance sheets and profit-loss account data will be expressed descriptively. The traces of the statist economic policy implemented in Türkiye will be shown by the monetary policy instruments implemented by the CBRT. In the period when a sound monetary and balanced budget policy is followed, there are no movements that will cause money and credit expansion.