Economic crises and central banking (The 2001 crisis in Turkey and the efficiency of the Central Bank)

The fluctuations in the prices of goods, services, production and foreign exchange, which are considered as the basic building blocks of the economy, beyond acceptable levels, and which cause the unsustainability of the current conditions, are called economic crisis. Economic crises have emerged for many different reasons until today. Central banks have become one of the most important actors of the monetary policies of countries in the historical process. In most cases of economic crisis, the governments of the countries expected their Central Banks to manage the crises and bring the economy back into balance. It has also been argued that the condition for central banks to be successful in managing crises is related to their independence. It has also been argued that whether the economies are moved to crisis environments or not is related to whether the central banks are independent in the economy or not. With this dimension, central banks have been independent from political authorities in the vast majority of developed economies. Here, our hypothesis is that the dependency or independence of central banks is effective in the formation of economic crises in countries, and as the independence of the central bank increases and crisis management capabilities increase, they can produce more effective solutions against crises. In this context, in this study, the concept of money in economies and central banking as a monetary authority are primarily examined. Then, the economic crisis, which is a big problem for countries, and the crisis-creating or crisis-solving roles of central banks in these economic crises are discussed. In the context of analyzing this, the crisis that Turkey experienced in 2001 was taken as a case study and the effects of the central bank on the economic crisis and its effectiveness in resolving the crisis and the conditions for success in this activity were investigated. It can be seen that the independence of central banks is of great importance for the stability of the economy. Keywords: Central Bank, Central Bank of the Republic of Turkey, Financial Crises, 2001 Crisis, Economic Crises, Turkey