The Central Bank of the Republic of Turkey will take part in the FSB Steering Committee during the period 2013–2015 when Turkey will be chairing the FSB Regional Consultative Group for the Middle East and North Africa (MENA). As part of the governance reform of the International Monetary Fund (IMF), a New Constituency was established with the countries Turkey, Austria, Hungary, the Czech Republic, the Slovak Republic, Slovenia, Belarus and Kosovo. According to this agreement, Turkey will assume the Executive Director position for a two-year term between 2014–2016 and 2018–2020. At the G-20 meeting held in Los Cabos a number of emerging market economies including Turkey declared their intention to contribute to global financial stability by increasing the resources of the IMF. The Central Bank of the Republic of Turkey intends to contribute to IMF resources up to USD 5 billion, which will be counted as part of Turkey’s international reserves. The duties and responsibilities of central banks with regard to payment systems have to do with the development of the financial sector, which is the third main field. Efficient payment systems contribute to the deepening of financial markets by decreasing operation costs and settlement risks. Therefore, the active role assumed by central banks in the design, operation and oversight of payment systems becomes more crucial given the size of the global financial system. Hence, in line with the global trends in this field, the Central Bank of the Republic of Turkey cooperates with the Turkish financial system for the advancement of payment systems.

Academic studies indicate that an inflation rate that is on average higher by 10 percentage points may cause, on average, a quarter point decrease in the long term growth rates of the countries.1 While the average inflation rate in Turkey during 1974–2003 – the period with chronically high inflation rates – was 56%; average real growth per person was a mere 2%. On the other hand, during the period of 2004–2011, when inflation was expressed with single digits, average real growth per person increased to 3.3%. Our inflation target for the 2013–2015 period is set as 5%. Loans, exchange rates and inflation expectations are three crucial variables that are the determinants of price stability. Therefore, decreasing excessive volatility in the credit growth rate and exchange rates highly contributes to price stability. The second area of central bank responsibility is financial stability. The loss of financial stability has deep and long-term impacts on both growth and employment.2 The cost of preventing a financial crisis is much lower than the cost of the crisis itself. Turkey’s recent history is a very good example of this statement. The economic crisis Turkey went through in 2001 increased the country’s sovereign debt by 30 percentage points and severely affected growth and employment prospects. As of 2002, Turkey focused on establishing price stability, financial stability and introducing structural reforms aimed at increasing productivity. As a result, while the economic prosperity of the country increased rapidly, the financial sector gained resilience to exogenous shocks.