2011 was disclosed to public by the release of the “ monetary and exchange rate policy for 2011 ” on december 21, 2010. accordingly, the cbrt will continue with the inflation targeting and floating exchange rate regimes in 2011. the inflation target for end - 2011 has been set at 5. 5 percent and the uncertainty band has been maintained at 2 percentage points in both directions. 51. in line with our primary objective of achieving and maintaining price stability, we will continue to monitor macroeconomic risks and financial stability, and hence, take measures towards enhancing the effectiveness of the monetary policy and liquidity management in 2011. accordingly, in the upcoming period, the cbrt may alter its liquidity management strategy to meet the emerging needs and actively use additional policy tools, such as the corridor between borrowing and lending rates and reserve requirements, to maximize the effectiveness of the 1 - week repo auction rate, the main policy tool, and to contain macro financial risks. 52. in the period ahead, monetary policy will continue to focus on achieving price stability on a permanent basis. to this end, the impact of the macroprudential measures taken by the cbrt and other relevant institutions on the inflation outlook will be considered carefully. fulfillment of the commitments to fiscal discipline in the medium term and strengthening the structural reform agenda will contribute to the improvement of turkey ’ s sovereign risk, and thus, support macroeconomic stability as well as price stability. sustaining the fiscal discipline will also provide room for monetary policy maneuver, supporting the social welfare by keeping interest rates permanently at low levels. in this bis central bankers ’ speeches respect, i would like to conclude my remarks by underlining that timely implementation of the structural reforms envisaged by the mtp and the european union accession process remains to be of utmost importance. thank you. bis central bankers ’ speeches

illustrated in the box to the left. • the right - hand box contains different estimates for the world, eu and denmark. • the estimates are based on net - zero scenarios for the world, fit for 55 scenarios for the eu and the 70 per cent goal of the climate act for denmark. • these figures are associated with many uncertainties, and i do not want to focus on any specific figure. page 5 of 21 • the point is : vast amounts of funding are necessary for the global economy to transition. slide 6 the final point on sustainable finance brings me the next topic : the role of the financial sector in the green transition. first, two important points : • we cannot and should not expect the financial sector – and here i include the central banks – to solve the climate problem. the tools to shift behaviour, demand and supply away from fossil fuel - based energy are fiscal and regulatory. • however, the financial sector can support the transition by performing its role of intermediating capital and managing the associated risks. • i will elaborate on this role in the next slides. page 6 of 21 slide 7 climate change and the transition bring both opportunities and risks to the financial sector. • any economic transition requiring investment is a business opportunity for the financial sector to apply its skills in risk pricing as well as return and profitability assessments. • the green transition is no different. the financing of green projects is paramount for the transition. without financing, the world cannot make the necessary investments. • the green transition faces a special set of challenges for risk management, which i will get back to. from a central bank and financial stability perspective, proper risk assessment associated with climate change and the energy transition is particularly important. • sound risk management means that risks should be held on balance sheets that have the capacity to absorb these risks if they materialise. • banks and investors must take account of climate - and energy - related risks in their credit policies and capital allocation. • this implies a special focus on the risk assessment of investments in assets that may become ‘ stranded ’ in the transition, such as fossil - intensive investments. • green companies must undergo the same scrutiny as regular companies. the recent energy crisis in europe illustrates how climate - and energy - related risks are already first order. page 7 of 21 slide 8 climate - related risk pricing is difficult, but essential, in the financial sector. and often, climate - related risks are not well priced. poorly priced climate - related risks are a financial stability concern