durmus yılmaz : global crises and economic governance speech by mr durmus yılmaz, governor of the central bank of the republic of turkey, at the conference on “ global crises and economic governance ”, inonu university, malatya, 15 april 2010. * * * distinguished rector, distinguished academicians and esteemed guests, first of all, i would like to thank everyone who has contributed to the organization of this conference, primarily prof. cemil celik, the rector of inonu university and distinguished faculty members of the university. i take great pleasure in participating in such an event with you. i would like to start my speech with a brief evaluation of the global financial crisis. later on, i will share with you my observations related to developments in the global economy and the turkish economy. after presenting a brief overview of the monetary policy implemented and the measures taken by the central bank during the crisis, i would like to close my speech with the monetary policy exit strategy, which we announced to the public yesterday. as you know, problems that emerged in the us subprime mortgage market in the second half of 2007 spread the whole world to reach threatening levels for both financial and economic stability. we can say that the reaction of market players and the public has gone through four subsequent stages since the eruption of the crisis. these stages can be summarized as those of denial, disappointment, panic and hope. in the first stage, the markets had difficulty perceiving the dimension of the damage caused by the crisis and considered that such an incident would be overcome shortly and / or would not reach significant levels. as a matter of fact, especially in the first half of 2008, one of the most discussed items on the agenda of international financial circles was whether there would be a decoupling of economies or not. in that period, many economists and market specialists supported the idea that the crisis that emerged in advanced economies would have a limited impact on emerging economies and that emerging economies had the capacity of compensating the global demand deficit, which was to be observed. in conclusion, they claimed that there would be a distinct decoupling in the growth dynamics of country groups. it has been fortunate that the expected decoupling has not been as intense as estimated. it is inevitable for both developed and emerging economies to be affected by global economic turbulence in a period characterized by the progressively rising interdependent nature of global economies. however, the scale of

2022, the reduction in water availability and the drop in crop yields could reduce gdp by up to 6. 5 percent and could result in out - migration to urban areas of up to 1. 9 million moroccans by 2050. fortunately, the public authorities are well aware of this situation. i won't go into an exhaustive inventory of what has been achieved ; i'll just point out that the country was among the first to ratify international climate conventions, notably the united nations framework convention on climate change 1995, the kyoto protocol in 2002 and the paris agreement in 2016. more recently, the kingdom has launched several major sectoral programs and strategies, including the " 2020 - 2030 national climate plan " ; the " national low carbon strategy 2050 " ; the " 2020 - 2050 national water plan ". aspirations in the energy sector are also high and the target set for 2030 is to achieve 52 per cent of the energy mix from renewable sources. finally, it is worth recalling that in november 2021, morocco submitted an updated nationally determined contribution raising ambition to 45. 5 percent reduction of its greenhouse gases emissions by 2030. regarding fiscal policy, the framework law on taxation adopted in 2021 sets forth, as one of its objectives, promoting environmental protection, mainly through the introduction of a carbon tax. we believe that its successful implementation could have a significant impact. that said, it should be noted that combating climate change and mitigating its impacts require the mobilization of massive funding in a global context marked by extremely high public and private debt rates and shrinking fiscal buffers. in the case of morocco, the world bank estimates the investment needed for the period 2022 - 2050 at around $ 78 billion. ladies and gentlemen, one of the questions that arises in this context is related to the role of central banks. what is evident is that they will have to consider the impact of climate change in carrying - out their missions. indeed, this change affects growth, employment and inflation, the main variables on which monetary policy decisions are based. besides, climate - related risks are bound to have an impact on the banking and insurance industries, and on financial stability in general. however, the issue of central banks'contribution to the fight against climate change remains open to debate. should they? do they have the necessary capacity and resources? are their toolkits adapted to the expansion of their mandates? what would be the consequences on their conventional missions? on their independence? debate and discussions