Durmuş Yılmaz: The impacts of the current crisis on OIC member countries Opening speech by Mr Durmuş Yilmaz, Governor of the Central Bank of the Republic of Turkey, in the Meeting of the Governors of the Central Banks and the Financial Authorities of the Organization of the Islamic Conference Member Countries, Istanbul, 3 October 2009. *  *  *  Governors of Central Banks and Financial Authorities of the Member Countries of the Organization of the Islamic Conference (OIC), Dear Guests, I would like to express our pleasure to host this event and such distinguished participants here in Istanbul. Welcome to the meeting of the Governors of the Central Banks and the Financial Authorities of OIC member countries, which is the only organization that gathers Islamic world under one roof. What makes this meeting more meaningful is that we are also celebrating the 40th anniversary of the Organization of the Islamic Conference and 25th anniversary of the Standing Committee for Economic and Commercial Cooperation of the Organization of the Islamic Conference (COMCEC) this year. As the cradle of civilizations for centuries and the European capital of culture in 2010, Istanbul is an ideal venue for this meeting. Dear Guests, The current global financial and economic crisis, we have been experiencing since last year, has profound negative impacts on the economies of many countries in all parts of the world, reinforcing inspiration and need for restructuring the current order of the global community based on the principles of justice, equity, participation and peace.

As regards the sector’s capacity and the size of banks, staff and office numbers fell by around 12%, standing at similar figures to those as at end-2004, and the average size of banks in terms of their assets increased twofold. Yet this progress was not enough to restore investors’ confidence in the soundness of our banking system. Given the double-dip recession, the insufficient reduction in the budget deficit and the continuing effects of the sovereign debt crisis, doubts persisted about the quality of construction and real estate development-related assets. In an attempt to dispel this uncertainty, various measures were adopted in the first half of 2012. Furthering the principles that have governed the ongoing restructuring of the financial system, the measures addressed accelerating the clean-up of bank balance sheets, reinforcing their solvency, boosting integration processes and promoting transparency. RDL 2/2012, approved in February, stipulated an increase in provisioning for construction and real estate development-related assets, and the creation of a capital buffer to cover potential losses arising on problem loans associated with land and ongoing developments. More recently, in May 2012, the Government approved RDL 18/2012, on the clean-up and sale of financial-sector real estate assets. The aim was to dispel doubts over the quality of Spanish credit institutions’ non-doubtful real estate portfolio. To do this, provisions for construction and real estate development-related assets not classified as troubled have been raised substantially, bringing forward the impact of potential additional impairment to this portfolio.