Ladies and Gentlemen, The next important question is “how to carefully set the appropriate path and pace of further integration in the new economic and financial landscape?” With the principle of market-led integration in our region, the role of the authorities is in terms of promoting integration and establishing infrastructures that may be too costly at the initial stage for the private sector. In this spirit, the direction and speed of integration will be largely determined by market forces. The private sector will therefore, all the more important, need to spearhead with their ingenuity, creativity, and determination and also work closely with authorities. However, the authorities still have a main role in determining the degree of capital account openness which is a necessary condition for greater financial integration with external markets. It is true that resisting further capital account liberalization over an extended period is likely ineffective and counterproductive. Yet, as recent events have demonstrated, large and volatile capital flows can become a destabilizing effect on an economy, and, with limited monetary policy tools, it may be necessary to “throw sand in the wheel” when circumstances warrant to preserve the overall economic and financial stability. This is still a topic for open debate, but I think I would like to move on to other important points. Ladies and Gentlemen, To facilitate greater integration both at the global and regional levels, increased economic and financial resiliency is unquestionably a prerequisite for success. In our region, much has been achieved since the Asian financial crisis recovery period.

Mr. Erçel explains developments in the Turkish economy that help in understanding the country’s market opportunites Speech by the Governor of the Central Bank of the Republic of Turkey, Mr. Gazi Erçel, on the occasion of the Conference on “Private provision of infrastructure in Turkey” held at Çiragan Palace in Istanbul on 3/4/97. For a comprehensive understanding of the opportunities offered by Turkey’s market, I should stress the implications of our journey toward liberalisation. In 1980, with world conditions changing and the domestic economy in crisis, Turkey launched a structural adjustment program based on free market principles and an outward-looking economic policy. Since then, a series of liberalisation measures have been taken. The most significant accomplishment of the Turkish liberalisation process is that it has restructured economic relations. Both the financial system and the foreign exchange system have been liberalised. Before discussing Turkey’s economic performance, I would like to describe some features of our foreign exchange system and financial system. Let me begin with the foreign exchange system. Efforts to liberalise Turkey’s balance of payments go all the way back to the Great Depression, and ever since the 1930’s, the issue has been whether to liberalise the current account or the capital account. Now these questions have been settled. Let me summarise the state of the foreign exchange regime under five headings: 1. Residents are permitted to buy, sell, and use foreign exchange freely. 2.