Durmuş Yilmaz: Enhancing "ShamGen" banking - Turkey, Syria,
Lebanon, Jordan
Speech by Mr Durmuş Yilmaz, Governor of the Central Bank of the Republic of Turkey, at
the conference on enhancing "ShamGen" banking - Turkey, Syria, Lebanon, Jordan, hosted
by the Central Bank of Turkey and co-organized by the Al Bank Wal Mustathmer Group,
Istanbul, 28 March 2011.
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Distinguished Guests,
Welcome to the international "Enhancing "ShamGen" Banking: Turkey, Syria, Lebanon,
Jordan" conference hosted by the Central Bank of Turkey and co-organized by the Al Bank
Wal Mustathmer Group. We are delighted to host Governors and Deputy Governors of
Central Banks, Chairmen of Banks Associations, CEOs of banks from Syria, Lebanon and
Jordan as well as international economists and finance specialists.
During the two-day conference, issues towards improving banking and financial cooperation
among Syria, Lebanon, Jordan and Turkey will be discussed in the context of Turkey's
recently developing relations with her neighbors and other countries in the region. The
conference will address issues such as enhancing banking cooperation between these
countries, Banks Associations' possible contributions to the process, payment systems,
Islamic banking implementations and prospective cooperation fields, funding of small and
medium-scale enterprises in the region and the future political and economic outlook of
ShamGen countries.
As we all know, the share of developing countries in the global economy has been growing
and, in line with the increased importance of these economies, we witness significant
changes in decision-making mechanisms worldwide. The fact that a wide range of important
decisions on issues ranging from food and energy safety to repair and reconstruction of the
financial system are made at the G-20, of which Turkey is an active member, clearly
suggests that the global economy's center of gravity is shifting.
Corresponding to the ever-increasing importance of the G-20, the weight of Turkey and her
peer developing countries in international institutions, such as the IMF, is increasing as well.
In his statement in the late 2010, IMF Managing Director Dominique Strauss Kahn described
the changes in the Fund's quotas and governance "the most fundamental governance
overhaul in the Fund's 65-year history, and the biggest ever shift of influence in favor of
emerging markets and developing countries". Once the IMF's 14th General Review of
Quotas is completed, Turkey's share in the IMF's total quota will be more than doubled
compared to 2004.
Their outstanding economic performance and rapidly increasing share in the global economy
over the past decade have considerably helped developing countries to have an increasing
voice in the international arena. These countries, among which Turkey, with its economic
performance, stands as one of the leading countries, have weathered the recent global crisis
with less damage compared to developed countries and exhibited better performance in
reverting back to pre-crisis production levels and growth rates. Recently, there have been
debates about whether the developing country group has decoupled from developed
countries. Although the decoupling of countries seems highly difficult in a global environment
where all countries get increasingly interpenetrated via capital flows and financial integration,
it is a fact that developing countries have ended up in a much better position in the recent
global crisis in comparison to their economic performance in the past crises. It would not be
wrong to assert that the main reasons underlying this transformation are the increased
commercial, financial and economic relationships among developing countries, accompanied
by strong economic and institutional governance practices formulated in view of lessons
learnt from past crises.
The increase in the volume of trade among developing countries has reduced the adverse
effects of the weak course of external demand from advanced economies. Therefore,
production and employment levels in developing countries have assumed a more rapid pace
of recovery.
At this point, by using Turkey's export data, I would like to exemplify the importance of
diversification of export markets driven by improving relations with countries in the region. As
it is known, the European Union countries have the largest share in Turkey's exports.
Nevertheless, the share of member states of the Organization of the Islamic Conference
(OIC) in Turkey's exports is rapidly growing. During the period between end-2000 and
end2010, while the share of the European Union countries in total exports of Turkey declined
from 56% to 46%, that of OIC member states rose from 13% to 29%. The significant increase
in the share of OIC member states in our exports might be, at first sight, attributed only to the
economic slowdown in the European Union. However, related figures indicate that the share
of OIC members in Turkey's exports had already increased from 13% to 19% between 2000
and 2007 before the start of the global financial crisis. Besides, visa exemptions probably
played an important role in the recent improvement in Turkey's trade with the region's
countries.
Distinguished Guests,
Regional collaborations have made a significant contribution to the increase in the volume of
intra-emerging markets trade. Although tradable products can be transported to markets of
any distance owing to advancements in transportation infrastructure and technology
worldwide, distance is no less important than it was previously. Due to increased competition
among countries, factors such as distance and transportation costs continued to be among
the leading determinants of competitiveness. Various academic studies also confirm that the
distance elasticity of trade is on the rise. As it is known, complementary value added chains
have been formed particularly among Asian countries, and having benefited from the
proximity of neighbor countries and their individual advantages in different fields, these
countries have experienced a high-speed development process through regional
cooperation, where low-costs-for-all have boosted the competitiveness of all economies in
the region.
The "zero-problem" policy Turkey has been trying to formulate in recent years with neighbor
countries, the steps taken to lift visa requirements, and above all, the active part Turkey
played in improving relations among the countries of the region, all pave the way for regional
collaborations that are likely to generate favorable economic outcomes in future for all
countries of the geographical area we live in. This conference that the Central Bank of
Turkey hosts today is a step toward improving relations among the banking sectors of
Turkey, Syria, Lebanon and Jordan in the short-term. Nevertheless, in the long-run, it is
expected to contribute to efforts towards a common market surrounded by the Persian Gulf,
the Red Sea and the Mediterranean with the participation of the region countries.
The Banks Association of Turkey, Central Bank of Syria, The Banks Association of Lebanon
and The Banks Association of Jordan will be signing a Regional Cooperation Agreement
in the field of Banking shortly. This agreement aims to enhance cooperation among the
banking systems of these four countries and to improve communication channels between
them. Thanks to this agreement, cross-border trade and investments among these countries
will be supported and facilitated by this cooperation between our banks. Turkey signed free
trade agreements with Syria, Jordan and Lebanon in 2007, 2009 and 2010, respectively.
Moreover, visa-exemption agreements were made between Turkey, Syria and Jordan in
2009 and between Turkey and Lebanon in 2010. Besides, these four countries established a
High-Level Strategic Cooperation Council in 2010. The regional cooperation agreement to be
signed at the ShamGen Banking Conference will complement these agreements and
enhance their effectiveness.
The Turkish Banking Sector, which was restructured following the 2001 economic crisis,
managed to overcome the global crisis with no apparent damage and verified its outstanding
resilience. Turkish banks are also interested in venture opportunities in the Middle East and
will contribute substantially to the betterment of the banking systems of the region countries.
Moreover, I am of the opinion that also the participation banks in Turkey operating through
the interest-free system will not only contribute to but also benefit from cooperation among
these countries.
Intended as a long-term formation, the common market calls for not only political and
economic, but also cultural cooperation. The fact that it is easier to establish commercial and
economic cooperation between closer cultures is supported by both history and academic
studies. Therefore I believe, it is significant that this conference is organized in İstanbul, a
city that has hosted a great diversity of cultures in the past, as well as being the European
capital of culture in 2010. At the end of this conference, a city tour will be organized for our
guests who would like to get to know İstanbul better. I hope that you all enjoy this beautiful
city.