levels for a while and may need to follow a low course for an extended period. in the first quarter of 2010, central banks mostly implemented exit strategies from expansionary monetary policies and therefore the global monetary policy outlook became partially tighter. in the said quarter, a limited number of central banks tightened their monetary policy stance by increasing policy rates, while most of them kept their rates unchanged at low levels. in the meantime, these central banks started to terminate the expansionary monetary policy implementations, which are conducted with the use of unconventional policy tools. accordingly, while drawing attention to the risks regarding pricing behaviors and taking account of the normalization in both money and credit markets ; we decided to gradually withdraw some of the measures taken in the foreign exchange and turkish lira markets during the crisis. owing to the importance that we attach to transparency and predictability, i would like to remind you that we informed the public about the general framework of our exit strategy in our press release of 14 april 2010, before putting the strategy into practice. 3. inflation and monetary policy outlook now, i would like to share with you the monetary and financial conditions, as well as the economic outlook underlying our forecasts. then, i will outline the central bank ’ s inflation forecasts presented in the inflation report that will be posted on our website shortly. in the first quarter of 2010, as perceptions regarding recovery in the global economy became more pronounced, the trend of increase in risk appetite in global financial markets continued. accordingly, as had been the case since the second half of 2009, emerging markets attracted more capital through increased portfolio movements. on the other hand, risk premium indicators in most developing countries remained below those of pre - crisis levels. in this period, turkey ’ s risk premium indicators continued their positive trend and did not differentiate from the general trend except for short periods when developments specific to our country were pronounced ( figure 21 ). the improvement in global risk perceptions in the first quarter led the currency of many developing countries to appreciate. in terms of changes in currency values, the turkish lira did not significantly differ from currencies of other emerging markets in this period and the relatively stable course of the turkish lira in the crisis period continued throughout the postcrisis process as well ( figure 22 ). national income data of the last quarter of 2009 were consistent with the outlook we presented in the january inflation report. in this period, while the mild recovery in private sector demand continued, public sector consumption expenditures increased more than envis

the 2001 crisis. the declining public debt burden and the diminishing fiscal dominance in turkey put an end to the crowding - out of the real sector. that boosted the supply of loanable funds. banks have returned to their traditional role of financial intermediation instead of financing government expenditures. share of public securities in turkish banking sector assets declined by onethird to 28 % in the last 5 years ; while share of credits to private sector more than doubled and reached to 49 % during the same period. the credits extended to the small and medium enterprises by turkish banking sector have also increased significantly to usd 95 billion as of 2007. this corresponded to almost 20 % of the gdp. as a further note, 32 % of these credits were in the category of credits extended to micro enterprises. the ratio of private sector credit used by households and firms to gdp has also rapidly increased, though it is still low in international standards. of course, raising the share of private credits in the financial system does not necessarily mean that each and every segment of the population would gain access to financial services. the low - income segment of the society, in particular, may not have access to capital and that would have two principal adverse effects. first, they may not be able to raise the expected value of their income and therefore of consumption and future investment and asset accumulation. second, due to lack of access to credit, the poor would face high variation in their income and consumption, and the downward risk on income threatens their ability to satisfy basic consumption needs. increasing the funds available for entrepreneurs that have micro - scale business plans but do not have access to credit, have merits such as contributing to the production level and unemployment ratio while also strengthening the social structure of a country. of course, it should be noted here that while the benefits from financing these activities are more or less common, selection of main business areas where these funds should be used obviously depends on country specific circumstances and needs. dear guests, in the last part of my speech, i would like to share with you my thoughts on the external sources of “ access to finance ”. as i touched upon initially, financial innovation and financial integration have led to explosive growth in the international movement of capital. these flows serve as an important catalyst for domestic financial market development, as reflected both in the size of the banking sector and equity markets, as well as the quality of institutions for supervision and regulation. in recent years, attention has been given on how macroeconomic policies should respond