that countries share not only benefits of financial integration but also the risks associated with it. in my opinion the most important lesson that we should derive from the current turmoil is the need for a global lender of last resort mechanism. in addition, with the cooperation of local and international authorities an early warning system should be constructed so that the fragilities in the international financial system would be identified and necessary and sufficient measures to fix them would be taken beforehand. in this context i believe that effective and efficient risk management and re - regulation will be the cornerstones of the new global financial architecture where the financial intermediation should not let the direct relationship between lender and borrower to be cut completely under various forms of effective risk diversification and securitization. sound domestic policies for a healthy banking sector are necessary but not sufficient for addressing contemporary challenges of the global world. in this respect, improving policy coordination at the regional and international level is a must. only then, we would be able to attain the optimal level of international financial regulatory rules and guidelines together with adequate tools that would match the complex nature of the international financial markets. with this consensus in mind, g - 20 leaders at their summit in mid november, agreed upon an important set of principles on reforming the international financial architecture. we strongly support the promotion of these principles that include strengthening transparency and accountability, enhancing sound regulation, promoting integrity in financial markets, reinforcing international cooperation and reforming international financial institutions. we must lay the foundation for reform altogether to ensure that a global crisis, such as this one, does not occur again. thank you.

uncertainties regarding the timing and size of a policy rate hike continued. in this period, the european central bank ( ecb ) cut its policy rates against the risks of economic slowdown and deflation and announced a kind of quantitative easing program of buying covered bonds and asset - backed securities. in the second and third quarters of 2014, indicators for global economic activity performed lower than expected, causing growth forecasts for this year to be revised down. financial market volatility and falling global growth rates led to some fluctuation in capital flows to emerging economies ( chart 1 ). following the weakening global growth outlook, commodity prices dropped markedly as well. bis central bankers ’ speeches regarding the developments in the turkish economy, the recent global financial volatility appears to have affected turkey in a way similar to other emerging economies. in the third quarter, turkey ’ s risk premium indicators fluctuated on par with those of other emerging economies ( chart 2 ). economic activity lost some momentum after the first quarter. the slowing eu growth and geopolitical tensions have restrained external demand. despite waning external demand, exports continue to support the balanced growth. the macroprudential measures and our tight monetary stance have had positive implications for the core inflation trend. a sizable amount of the significant first - half increase in core inflation indicators was reversed in the third quarter. annual core goods inflation continues to slow down as the negative effects from exchange rate changes diminish. moreover, falling oil prices restrict the inflationary pressures on energy items. however, elevated food prices cause inflation to hover significantly above the target. we expect significant disinflation for bis central bankers ’ speeches the upcoming year. the continued decline in cumulative exchange rate effects, the return of food inflation to the average level of previous years and the fall in commodity prices, especially oil, will be the main factors contributing to disinflation. moreover, we believe that the tight fiscal stance set out in the medium term program ( mtp ) will support the decline in inflation. 1. monetary policy and monetary conditions distinguished guests, the central bank implemented a front - loaded and strong monetary tightening in the first quarter of 2014 and then lowered policy rates gradually amid reduced domestic and external uncertainty in the second quarter. during the third quarter, we firstly cut the one - week repo auction rate from 8. 75 to 8. 25 percent, and the overnight borrowing rate from 8 to 7. 5 percent in july. in august, to operate within a more