to the increase in the volume of intra - emerging markets trade. although tradable products can be transported to markets of any distance owing to advancements in transportation infrastructure and technology worldwide, distance is no less important than it was previously. due to increased competition among countries, factors such as distance and transportation costs continued to be among the leading determinants of competitiveness. various academic studies also confirm that the distance elasticity of trade is on the rise. as it is known, complementary value added chains have been formed particularly among asian countries, and having benefited from the proximity of neighbor countries and their individual advantages in different fields, these countries have experienced a high - speed development process through regional cooperation, where low - costs - for - all have boosted the competitiveness of all economies in the region. the “ zero - problem ” policy turkey has been trying to formulate in recent years with neighbor countries, the steps taken to lift visa requirements, and above all, the active part turkey played in improving relations among the countries of the region, all pave the way for regional collaborations that are likely to generate favorable economic outcomes in future for all countries of the geographical area we live in. this conference that the central bank of turkey hosts today is a step toward improving relations among the banking sectors of turkey, syria, lebanon and jordan in the short - term. nevertheless, in the long - run, it is expected to contribute to efforts towards a common market surrounded by the persian gulf, the red sea and the mediterranean with the participation of the region countries. the banks association of turkey, central bank of syria, the banks association of lebanon and the banks association of jordan will be signing a regional cooperation agreement in the field of banking shortly. this agreement aims to enhance cooperation among the banking systems of these four countries and to improve communication channels between them. thanks to this agreement, cross - border trade and investments among these countries will be supported and facilitated by this cooperation between our banks. turkey signed free trade agreements with syria, jordan and lebanon in 2007, 2009 and 2010, respectively. moreover, visa - exemption agreements were made between turkey, syria and jordan in 2009 and between turkey and lebanon in 2010. besides, these four countries established a high - level strategic cooperation council in 2010. the regional cooperation agreement to be bis central bankers ’ speeches signed at the shamgen banking conference will complement these agreements and enhance their effectiveness. the turkish banking sector, which was restructured following the 2001 economic crisis, managed to overcome the global

such periods it would be appropriate to support the data from the h index with other indexes that have low fx rate pass - through ( for example ; evaluating them with service prices inflation ). hence, the central bank will not use only one indicator to assess the main trend in inflation and will openly inform the public of the type of the relevant indicator and the degree of its importance. moreover, after reaching a satisfactory number of observations, new indices can be compiled based on different techniques and the sca can be updated. public sector ’ s role in the inflation targeting regime in the inflation - targeting regime, developments in the public sector are a matter of concern from the monetary policy perspective. the cbrt certainly cannot control polices implemented by the public sector. however, the fact that the size of the public sector relative to the economy is still large makes it necessary to closely monitor the developments in this area. in accordance with its law, a central bank, which focuses on price stability, has to monitor developments in budget and fiscal policy and has to react to the possible repercussions of these policies on inflation. policies of the public sector have the potential to affect the inflation outlook through various channels. the first channel comprises expectations. further enhancement of fiscal discipline through its continuity will increase the effectiveness and predictability of monetary policy by extending the borrowing maturities and reducing risk premiums and the volatilities in risk premiums and facilitate the management of inflation expectations. pricing behavior of goods and services produced or controlled by the public sector itself or the indirect taxation channel has a direct effect on inflation. in this framework, pricing goods and services produced by the public sector rationally and enhancing the quality of fiscal discipline is crucial in terms of the predictability of inflation. another channel, which affects inflation and inflation expectations, is the incomes policy of the public sector. one of the main determinants of expectations for price and wage inflation in turkey is the increase in wages made by the public sector to its own employees. wage increases in the public sector may set a precedent for the private sector. in this context, the consistent trend of the incomes policy with the inflation target is significant in terms of achieving the inflation - targets more easily and quickly. one of the main components of total demand is the public sector ’ s direct purchase of goods and services. therefore, while evaluating developments regarding the inflation outlook, the central bank carefully monitors public expenditures as well. the central bank takes into consideration the budget projections while setting the inflation