changes in money market interest rates, and will create an automatic mechanism for determining turkey ’ s international reserves, and hence base money. when there is an excess of demand for foreign exchange, the withdrawal of turkish lira from the market will not be offset by increasing net domestic assets. this in turn will increase the demand for turkish lira, while decreasing the demand for foreign exchange. provided there are no major exogenous shocks to the system during the program period, we expect the central bank ’ s net international reserves to remain at comfortable levels. the floors established for net international reserves for the four quarters of 2000 are us $ 12 billion, us $ 12. 5 billion, us $ 12. 5 billion and us $ 13 billion respectively. if for any reason net international reserves threaten to fall below these levels, the central bank will take measures needed to counter these trends. the exchange rate band mechanism will provide greater flexibility for net domestic assets after the second half of 2001. and as a result of this greater flexibility, the contribution of monetary policy to the attainment of the inflation target will grow as the influence of monetary policy on interest rates increases. finally, i should explain the changes we are making in the reserve requirement system. we are beginning to implement reserve requirements more flexibly in order to make it easier to meet banks ’ temporary liquidity needs and enable them to manage their liquidity more efficiently in the course of their operations. a sound banking system is an essential prerequisite for the efficient implementation of monetary policy. this is all the more true under a rule - based monetary policy regime. we announce the rules of the game clearly to the players in the expectation that they will follow them efficiently and fairly. the banking law that was enacted by parliament in the summer of 1999, and the amendments made during the last month, were aimed at giving the banking system the necessary efficiency and soundness. in conclusion, let me summarise recent history. we have been working on this program for the past two years. its technical excellence accurately reflects well the effort that has gone into it. i do not hesitate to say that the program is “ comprehensive ”, “ strong ”, “ ambitious ”, “ bold ” and “ imaginative ”, and most of all “ achievable ”. the willingness of the political authorities to execute this program is clear from the way they have taken the necessary but politically difficult economic decisions : quickly, without hesitation or second thoughts. the imf and the world bank have

12 - month depreciation rate of 20 %, in line with the wpi target for the period. at the end of each quarter, we will pre - announce a depreciation rate for the quarter beginning nine months later, and leaving the pre - announced rates for the intermediate quarters unchanged. this means that at the end of every three - month period, the rate of increase in the exchange rate basket for the next 12 months will be publicly known. the system will function in this manner for the first 18 months of the program. then, starting in july 2001, a gradually widening symmetrical band will be introduced for the pre - announce exchange basket. from this point on, the total width of the band will be 7. 5 % by end - 2001, 15 % by end - june 2002, and 22. 5 % by end - december 2002. it will be noted that while we are making strong commitment to a pre - announced exchange rate path, we are simultaneously announcing our exit strategy, which should allay concerns about the difficulty of making a smooth exit from such systems. of course, there are also some risks created by pre - announcing the path of the exchange rate. but the strength of the fiscal policies implemented so far, and the structural reforms undertaken by the political authorities, should substantially reinforce the chances that our exchange rate policy will succeed. our exchange rate policy will receive further support from monetary policy. to promote this, we are moving to a more rule - based monetary policy and away from one based on discretion, especially during the first 18 months. during this period, the central bank of turkey will not increase its stock of net domestic assets. all fluctuations in base money will come from balance - of - payments flows. accordingly, the ceiling on net domestic assets at the end of each quarter is fixed at tl – 1, 200 trillion ( excluding the change in the revaluation account, which is part of the net domestic assets definition ). in addition, during this period, net domestic assets will fluctuate within a parallel band whose upper and lower limits will be determined as plus - or - minus 5 % of previous end - of - quarter base money figures. in recent years, we have been limiting net domestic assets by decreasing credits to the public sector. this policy will be continued in coming years. in addition, we will also stop sterilising the capital inflows and outflows. this policy of no sterilisation will permit rapid, market - determined