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President of Finance Office Prof. Dr. Göksel Aşan answered questions in A Para TV Channel related to Covid-19 pandemic and its economic effects on both Türkiye and the world.

President of Finance Office Prof. Dr. Göksel Aşan answered questions in A Para TV Channel related to Covid-19 pandemic and its economic effects on both Türkiye and the world.

While saying an economic recession began in Türkiye due to Covid-19 as in other countries, Mr. Aşan stressed that Türkiye is positively differentiated since the country has not shut off all the economic activity completely thanks to the strong National Health System (NHS). Moreover, Mr. Aşan said strong NHS dynamics and not shutting off the whole economy, provide expectation of V-shape recovery and this has been seen in the leading indicators.

Mr. Aşan emphasizes that Covid-19 pandemic would affect the world economy in 2 ways. The first one is, the economic damage in the world but the second and the most important one is, it would make the change of economic system faster in the world and in fact this change had already started before the pandemic. Mr. Aşan added that in this process, many large economies including developing ones are expected to become more closed and interventionist in specific fields such as agriculture. Since those countries have noticed the cost of being connected to a single supplier country, they will attempt to diversify suppliers or shift to an import substitution production system.

Asked about the economic and financial measures that Türkiye have taken during the pandemic, Mr. Aşan stressed that Türkiye started to take measures before the pandemic, giving the example of TLREF which is about determining interest rate of TRY here in Türkiye, he also said that economic packages’ size to GDP is bigger than most of the advanced countries since treasury’s maneuver space is bigger than most of the countries given the indicator of public debt to GDP is only around %32.

Mr. Aşan points out that past experiences showed that the financial security is as important as border security so institutions took proactive measures. Although it is interpreted as capital controls by some circles, the deal with Euroclear shows that there is no such thing.

Moreover, for the banking sector in Türkiye , Mr. Aşan said that banks would gain more if they give support to real sector not just as a fund provider but also acting like shareholder, since Türkiye is expected to benefit most from the changes in supply chain in the world. Mr. Aşan added that Covid-19 would also bring growth to non-banking financial sector especially through the funding of SMEs.

About a question regarding Covid-19’s effect to İstanbul Finance Center, Mr. Aşan underlined that pandemic would not cause any deficiency on physical construction, adding that first move-in would start in the beginning of 2022. Most importantly legislation process of İstanbul Finance Center would be done before 2021, stressing that İstanbul Financial Center would be mostly for non- conventinal banking sector such as FinTech and participation finance. Mr. Aşan also stated that IFC is the core of new financial architecture which is to deepen capital markets and to bring growth to non-banking financial sector. All the regulation steps taken so far have been under this goal.

In addition, Mr. Aşan indicated that among the other finance centres such as Dubai, Qatar and Astana, the investors from UK have a special interest to İstanbul Finance Center due to its human capital, economic size and development process.

Given the quantitative easing that has been doing by FED and ECB, Mr. Aşan said that Türkiye will benefit from this process in the form of FDI and long term financial investment not in the form of hot money flow it used to be, since the process reduces the competitiveness given the big inflows appreciate the exchange rate more than it is supposed to be.

Mr. Aşan concluded his words by stating that the most important part of the IFC will be participation finance. He underlined that the current financial system is not sustainable since it is not putting the human in the center.