Studies aimed at removing these unfavorable conditions and attracting more direct investment have gained momentum in Turkey since 2000, followed by the enactment of a new Direct Foreign Investment Law. In this framework, the conditions for establishing companies were eased and the  16  BIS Review 36/2005  establishment process was shortened to 24 hours, while the number of official authorities to be referred to for the establishment procedures was reduced to 2 from 19 and the number of official documents to 8 from 56. Another positive development regarding foreign investments was the meeting of the Investment Advisory Council for Turkey in March 2004. This meeting gave foreign directors the chance to directly convey their evaluations about Turkey to top-level authorities. Meanwhile, Turkey had the opportunity to show her enthusiasm for foreign investments. However, despite all these favorable developments, no improvement was noted pertaining to problems regarding sectoral licenses, land acquisition and site development, taxes and incentives regulation, customs and standards, and intellectual property rights. At this point, I should underline the fact that investment problems encountered by Turkish entrepreneurs and foreign entrepreneurs in Turkey do not differ that much. “Complexity of the administrative and bureaucratic process” stands as one of the most important barriers to both domestic and foreign capital investments. To ensure long-term development in Turkey, the investment environment needs to be improved. This, in turn, depends on an efficient legal system as well as sustainable macroeconomic balances and administrative stability in terms of basic policies.

Financial and monetary conditions As we tighten monetary policy, market interest rates are rising further and credit to the private sector is becoming more expensive. Bank lending to firms has decelerated sharply over recent months. This partly stems from lower financing needs for inventories. But it also reflects weakening demand for loans to finance business investment, in the context of a steep upward move in bank lending rates and a considerable tightening in credit standards, which is also visible in our most recent bank lending survey. Household borrowing has continued to weaken as well, reflecting rising lending rates, tighter credit standards and a sharp fall in the demand for mortgages. As  3/4  BIS - Central bankers' speeches  loan creation decelerates, money growth is also slowing rapidly, with a marked decline in its most liquid components, including overnight deposits, only partially compensated by a shift to term deposits. Conclusion Summing up, the Governing Council will stay the course in raising interest rates significantly at a steady pace and in keeping them at levels that are sufficiently restrictive to ensure a timely return of inflation to our two per cent medium-term target. Accordingly, we today decided to raise the three key ECB interest rates by 50 basis points and we expect to raise them further. In view of the underlying inflation pressures, we intend to raise interest rates by another 50 basis points at our next monetary policy meeting in March and we will then evaluate the subsequent path of our monetary policy.