Systemic crises, turbulence and transitions constitute critical conjunctures during which changes in dominant governance paradigms tend to occur. In this vein, the global economic crisis and exit strategies implemented across the world strengthened calls for a new form of central banking that focuses on economic growth, employment and investment, along with the conventional goals of price and financial stability. Intuitively dubbed "developmental central banking," this new approach represented a reaction to the orthodox neoliberal conception of central banking that assumed that price and financial stability will automatically pave the way for macroeconomic stability and growth in the long run. The rather controversial performance of the Turkish Central Bank in supporting economic growth since 2013 and strong criticism from President Recep Tayyip Erdoğan indicate that the tide is beginning to turn towards developmental central banking in Turkey as well. This development is conceivable given the rapid spread of experimental central banking practices in emerging markets such as Bangladesh, Argentina, South Africa, Brazil and India to foster growth, employment and investment amidst the strain of global competition. Proactive central banking practices were the norm, rather than the exception, over the course of the 20th century in both the Western world and the newly industrializing economies in East Asia. Following major crises such as the Great Depression and the World War II, central banks played a coordinating role to instigate economic recovery in the West, while central banks in Japan, South Korea and Malaysia became key actors in the promotion of strategically important sectors by opening channels for industrial finance.

The neoliberal approach to central banking based upon the notions of central bank independence, inflation control and the use of indirect financial instruments (such as short term interest rates) became the global norm following the financial crises in the 1990s. Despite being useful for industrialized economies to preserve financial stability, this approach exerted a constraining influence on economic growth in emerging markets by encouraging tight monetary policies with artificially high interest and exchange rates and facilitating the influx of hot money from international sources. Turkey joined this group of emerging markets after the twin crises in 2000-2001 when the central banking framework was restructured, along with the broader macroeconomic governance architecture, under the aegis of the IMF-led stabilization program. Successive Justice and Development Party governments preserved the financial and monetary governance framework in the early 2000s in the name of maintaining macroeconomic and financial stability.

However, the growth dynamics of the Turkish economy were damaged by the impact of the global economic crisis due to declining demand in export markets as well as domestic developments such as the Gezi Park protests and the Dec. 17 and Dec. 25 incidents. Hence, the structural transformation package announced towards the end of 2014 signaled concrete steps to rejuvenate the real economy and long-term investment capacity to spur growth. Yet, the attitude of the central bank based upon the maintenance of tight monetary policy and reluctance to decrease base interest rates despite the need for increased growth triggered strong criticism. As for now, the Turkish Central Bank stands loyal to its neoliberal legal framework and continues to aim for inflation control at the expense of other macroeconomic goals. Yet this discrepancy between the priorities of the government and the central bank in terms of the country's transformation needs creates coordination problems that need to be alleviated via legal and structural reform. A scenario to the contrary will both damage the performance of the central bank to accomplish its stated purpose of inflation control and create further allegations for the breach of its independence. Today, we will discuss the link between "Central Bank