But one point I would stress is that whatever we decide upon, it will be designed to strengthen the current framework, and there is nothing that is being proposed that should give reason to hold off on the implementation of Basel III and other recently agreed reforms. BIS central bankers’ speeches  5  Enhancing the effectiveness of both micro- and macroprudential supervision Not surprisingly, the Committee’s agenda in the past few years has been dominated by policymaking. In 2012, implementation also came to the fore. But it is perhaps stating the obvious that effective supervision is the key to ensuring that regulation, once implemented, continues to work as intended. Only if supervisors are given the tools they need to act can they effectively perform their role. As the policy reform agenda moves towards completion, and the new rules are rolled out by national regulators, the Committee will increasingly turn its attention to enhancing supervisory practices. Enhancing microprudential supervision The Committee has a great deal of guidance on supervisory matters already on issue. However, much of this was developed before the financial crisis and will benefit from being updated to reflect lessons learned in recent years. Given the general applicability of much of this material, the benefits of this work will also extend well beyond Basel Committee member countries. As with all multi-year projects, this will require prioritisation. Near-term attention is likely to be given to operational risks (internal controls and information technology), governance, supervisory colleges, stress testing and dealing with weak banks.

The private sector should establish medium and long-term strategies, prepare more transparent balance sheets, give importance to modern risk management principles and pay attention to research and development activities in line with corporate governance. The public sector should assume a supervisory and regulatory role within the scope of the principles of good governance and work towards creating an atmosphere in which the unregistered economic activities and unfair competition are eliminated and thus the private sector can compete in international markets as equal partners. It is also worth to note that the sequence and prioritisation of reforms are also important. That is to say, one should bear in mind that achieving the best practice on governance in this dynamic economic environment requires a carefully planned long-term reform process. Finally, I would like once more to remind you that the prerequisite of reaping the benefits of good governance is to maintain macroeconomic stability. That’s why, in every step that we will take in the future, we have to be sure to avoid jeopardizing the macroeconomic stability that we have achieved so far. Distinguished guests, Good governance principles serve as a blueprint for decision makers both at the economy-wide and firm specific levels to cope with the changing economic environment and the uncertainty that comes with it. As of today, Turkey is in a position to focus on structural and micro reforms and to improve its own governance structure in line with the European Union membership perspective.