durmus yilmaz : enhancing “ shamgen ” banking – turkey, syria, lebanon, jordan speech by mr durmus yilmaz, governor of the central bank of the republic of turkey, at the conference on enhancing “ shamgen ” banking – turkey, syria, lebanon, jordan, hosted by the central bank of turkey and co - organized by the al bank wal mustathmer group, istanbul, 28 march 2011. * * * distinguished guests, welcome to the international “ enhancing “ shamgen ” banking : turkey, syria, lebanon, jordan ” conference hosted by the central bank of turkey and co - organized by the al bank wal mustathmer group. we are delighted to host governors and deputy governors of central banks, chairmen of banks associations, ceos of banks from syria, lebanon and jordan as well as international economists and finance specialists. during the two - day conference, issues towards improving banking and financial cooperation among syria, lebanon, jordan and turkey will be discussed in the context of turkey ’ s recently developing relations with her neighbors and other countries in the region. the conference will address issues such as enhancing banking cooperation between these countries, banks associations ’ possible contributions to the process, payment systems, islamic banking implementations and prospective cooperation fields, funding of small and medium - scale enterprises in the region and the future political and economic outlook of shamgen countries. as we all know, the share of developing countries in the global economy has been growing and, in line with the increased importance of these economies, we witness significant changes in decision - making mechanisms worldwide. the fact that a wide range of important decisions on issues ranging from food and energy safety to repair and reconstruction of the financial system are made at the g - 20, of which turkey is an active member, clearly suggests that the global economy ’ s center of gravity is shifting. corresponding to the ever - increasing importance of the g - 20, the weight of turkey and her peer developing countries in international institutions, such as the imf, is increasing as well. in his statement in the late 2010, imf managing director dominique strauss kahn described the changes in the fund ’ s quotas and governance “ the most fundamental governance overhaul in the fund ’ s 65 - year history, and the biggest ever shift of influence in favor of emerging markets and developing countries ”. once the imf ’ s 14th general review of quotas is completed, turkey ’ s share in the imf ’ s total quota will be more than doubled

testing required by the dodd - frank act, which we have shortened to the acronym dfast – the dodd - frank act stress tests. the purpose of dfast is to quantitatively assess how bank capital levels would fare in stressful economic and financial scenarios. the second program, called the comprehensive capital analysis and review, or ccar, combines the quantitative results from the stress tests with more - qualitative assessments of the capital planning processes used by banks. for example, under ccar, supervisors evaluate the ability of banks to model losses for various categories of loans and securities and to estimate earnings and capital requirements in alternative scenarios. we recently completed the first set of dfast stress see ben s. bernanke ( 2009 ), “ the supervisory capital assessment program, ” speech delivered at “ financial innovation and crises, ” a financial markets conference sponsored by the federal reserve bank of atlanta, held in jekyll island, ga., may 11 – 13. for more information about the scap exercise, see the board ’ s website at www. federalreserve. gov / bankinforeg / scap. htm. bis central bankers ’ speeches tests and disclosed the results, followed a week later by the disclosure of our ccar findings, which included our qualitative assessments of firms ’ capital planning. 3 the state of the banking system, then and now to provide context for the developments in the banking system since the introduction of the scap in early 2009, it ’ s worth briefly recalling the economic situation that prevailed at that time. the economy was in deep recession, with the unemployment rate having risen 4 percentage points, from 5 percent to 9 percent, over the preceding 12 months. the prices of real estate and equities had plummeted, interest rate spreads – such as the spread between rates on mortgages and treasury securities – had widened to unprecedented levels, and securitization markets had frozen. write - downs and losses continued to deplete banks ’ capital, unnerving investors and counterparties and exacerbating the severe funding pressures faced by many institutions. in the face of this instability, in 2008 and 2009 policymakers had taken a range of extraordinary measures : the federal reserve supplied liquidity to banks and other financial institutions, helping to calm the panic and begin the process of restoring the flow of credit to households and businesses ; the treasury department guaranteed money market funds and injected capital into banks under the troubled asset relief program ; the congress expanded deposit