’ s sovereign credit rating in the post - crisis period was not commensurate with the actual credit risk level in the market. actually, in the last quarter of the year, consistent with our discourse and projections, the medium and long - term forecasts for turkey have been revised to positive ; several investment institutions have increased turkey ’ s share in their portfolio, and, more importantly, the leading credit rating agencies have upgraded turkey ’ s sovereign rating ( figure 20 ). the improvement in global risk perceptions in the last quarter led to the appreciation of local currencies of many developing countries. a similar trend was observed in turkey too and the relatively stable course of the turkish lira continued in the last quarter ( figure 21 ). distinguished members of the press, the third quarter gross domestic product ( gdp ) release was in line with the outlook presented in the october inflation report. while the impact of the fiscal stimulus package on domestic demand weakened, the gradual recovery in external demand continued. within this framework, the gdp decreased by 3. 3 percent in the third quarter of 2009 compared to the same quarter last year ( figure 22 ). in seasonally adjusted terms, the quarterly upward trend continued in the third quarter, albeit slower compared to the second quarter during which the impact of the fiscal stimulus package was substantial ( figure 23 ). on the spending side, inventory change became the demand component that made the largest contribution to quarterly growth ( figure 24 ). nevertheless, private consumption demand slowed down slightly after the tax cuts were phased out ( figure 25 ). meanwhile, although private sector investments displayed a quarterly rise after a long time, investment expenditures are not expected to display a significant acceleration in the short term given the current uncertainty about demand and low capacity utilization rates, and it is obvious that it would take some time for investments to return to the pre - crisis level. data pertaining to the last quarter of 2009 indicate that the moderate recovery in aggregate demand continues ( figure 26 ). although inventory de - stocking, which started with the sudden contraction in demand in the last quarter of 2008 and remained strong throughout the first half of 2009, grew significantly weaker, demand for consumer goods continued to support disinflation ( figure 27 ). the significant decline in external demand has been one of the main factors driving the sharp contraction in economic activity during the last quarter of 2008 and the first quarter of 2009. as inventory de - stocking decelerated in the third quarter of 2009, the pick - up in aggregate

mr ercel talks about the turkish banking system speech by the governor of the central bank of the republic of turkey, mr gazi ercel, on the occasion of the american turkish council meeting in ankara on 18 march 1999. first, i would like to thank the atc arranging this gathering in ankara. i am very pleased to be here today, and i would like to talk about the turkish banking system. let me begin by recalling that banks are important and serious institutions. they depend on trust. they borrow money from the public and use it. they also perform the function of intermediation of funds. for many centuries they have been institutions that contributed to economic development. there are a number of generally accepted, long - standing principles that apply to these institutions. the most important are : - providing effective supervision over these institutions. - maintaining an environment in which they can function efficiently. - making risk - taking measures adaptable and applicable. - helping to improve the culture of credit. most of these responsibilities are assigned to public authorities, although some of them are the responsibility of the banks. during the last two decades, however, financial developments taking place all over the world have brought many changes in the practice of banking. innovations in information technology, the liberalization process of financial markets and a rapid increase in the sheer number of financial transactions have also affected banking. competition in banking and other sectors has increased. the number of kinds of risk has grown, and the varieties of non - financial institutions have multiplied. all these changes together call for a sounder banking system. they remind us of the fact that sound banking is a continuous process. the importance of risk management in various kinds of situations is well understood. in today ’ s environment, our understanding that a sound and efficiently functioning banking system is a fundamental necessity is once again reinforced. so what have we in turkey done to meet these exigencies? the turkish banking system is not a recently established one. turkey has a deep - rooted banking tradition that goes back to the 19th century. during the last two or three decades, the banking sector has played a prominent role in the turkish financial system, and has made considerable progress, aided to some extent by structural changes, towards making the turkish economy more financially liberalized. in response to the restructuring of the turkish economy and to the need to integrate turkey into the modern world of finance, turkish banks have made major changes both in their institutional structures and in the quality of services and products they offer. as a