Turkey can absorb its $15bn-20bn investment fund collapse without a systemic crisis as long as Finance Minister Mehmet Simsek stays, Timothy Ash wrote on September 25.

Ash, senior sovereign strategist at RBC BlueBay Asset Management in London and an associate fellow at Chatham House, made the case in a blog post titled "Turkiye - Is the funds failure a systemic event?", published on Substack.

Simsek, an ex-Wall St banker, "has the tools and the ammunition to enable Turkiye to ride through this crisis without a systemic event. And he has acted," Ash wrote.

He argued that Turkey was lucky the crisis broke when it did. Had the funds failed a year or so later the hole would have been far deeper; instead the authorities were able to throw "a safety blanket across the system" as soon as the funds at risk began to fail, placing them under state administration and pumping liquidity into the markets. The wider market reaction, he said, has been moderate.

The regulator ordered 131 funds run by seven firms into liquidation on September 17, and the $18bn fund collapse has so far affected 455,758 investors and led to 26 people being jailed pending trial.

By Ash's reckoning the damage comes to $15bn-20bn, or just over 1% of GDP. With public sector debt at around 28% of GDP and foreign exchange reserves of about $180bn, "the sovereign balance sheet looks sufficient to hold the line", he wrote.

The central bank's own data show the cushion thinning slightly as the funds unravelled: official reserve assets fell $4.3bn to $174.4bn in the week to September 18, as foreign currency assets dropped 9.2% to $55.1bn while gold rose to $111.6bn, Turkish Minute reported on September 25.

Ash stopped short of calling for a rescue of the funds themselves.

"I am not saying here that the state should bail out these funds - I think that would send a very strong negative moral hazard signal," he wrote, adding that in a worst case the state still has the fiscal and liquidity buffers to stabilise the wider markets and economy.

He also pointed to Turkey's young population, its entrepreneurial business culture and a banking sector he regards as well run, with strong risk management. He doubted the big lenders had any exposure to what he called "Ponzi scheme like funds".

"Every decent, professional Turkish banker I know knew exactly what these funds were. They would, and should have steered well clear of them," he wrote.

Improved relations abroad give Ankara a further line of defence, in Ash's view: allies in the Gulf, the US and even Europe could step in with swap lines if needed.

The biggest risk, he argued, is political. Ash said he had read reports that Simsek might be under pressure to resign "with disdain, and some fear". Simsek dismissed them on X on September 24, saying "the resignation claims being circulated about me are baseless", and the government's Centre for Countering Disinformation said the allegations did not reflect the truth, Hurriyet Daily News reported.

It is not the first time the minister has had to shoot down such talk. The presidency denied a report he was set to quit in July 2025, and officials rejected similar rumours in August 2024.

"If Simsek is forced out of office by domestic politics around this Funds issue, the risk of a systemic crisis would increase massively," Ash wrote.

He credited Simsek with pulling Turkey back from the brink after 2023, when high inflation, low policy rates, a sliding lira and a much depleted balance sheet had the country facing a systemic crisis. "Simsek turned that around and strengthened the balance sheet beyond recognition," he wrote, warning those gains would quickly reverse if the minister went.

"I would say here that Simsek's continued stay in office is systemically important. I just cannot think who he could be replaced by at this stage, who could provide a similar level of assurance."

Ash did not let the regulators off the hook. Mistakes were made and red flags were missed, he wrote, calling for a proper investigation into the schemes, for those responsible to be held to account and for "root and branch" reform of the rules governing Turkish financial markets.

That, he argued, is needed to protect domestic and foreign investors, restore confidence in markets and macro-financial stability, and keep alive Ankara's ambition to turn the Istanbul Financial Centre into a genuinely global hub.

Ash framed the affair as a contest between reformers grouped around Simsek, who want a stable macroeconomy and markets regulated to international standards, and "those with a different vision of Turkiye perhaps where the rules of the game are stacked in their favour and to their ultimate profit".