designing and pursuing its monetary policy. the new law will enable the bank to choose and to use its monetary policy and instruments independently. if the draft - law is ratified in the parliament just as adopted in the commission, a monetary policy committee will be established. it will be consisted of governor, vice governors, one member to be elected from among the board members and one member to be designated by council of ministers upon the proposal of the governor. this committee will play an important role in setting the targets and regulations, upon which the central bank will act jointly with the government. however, the central bank will support the governments ’ policies on economic growth and employment, on condition that they do not conflict with the aim of achieving price stability. the draft - law is removing a number of constraints of the present law on the monetary policy actions and is bringing new facilities. the concepts of transparency and accountability are underlined in the draft - law. for example, the governor of the central bank will report to the council of ministers and will brief the planning and budget commission in parliament twice a year on the bank ’ s activities. moreover, the bank will disclose its monetary policy implementation to the public by means of reports and announcements. in addition to this, if by any chance inflation targets are missed or should there be a probability of failing to hit the targets, then the bank will explain the reasons thereof to the government and to the public. the balance sheet, profit and loss account of the bank will be audited by independent agencies, which is another element increasing the bank ’ s transparency. to ensure stability in the financial system and to increase its efficiency in achieving the price stability, the central bank will have the power of taking necessary measures to strengthen the financial system and to determine the systemic risks. besides removing the burden of the state - owned banks from the financial system and restructuring the banking system, the measures that would reduce the public sector borrowing requirement will boost the economic efficiency and secure the price stability. the central bank will not in any manner whatsoever extend credit to the treasury and to the public sector, including outright purchase of government papers, as envisaged in the maastricht criteria. however, a transition period of six months is needed, before we can adhere to this principle in view of the operations we have to conduct in this post - crisis environment. having said all this let me end my remarks by making a last point. the extraordinary period, which turkey has undergone recently, should not create an obstacle for

monetary policy actions. one of the necessary conditions for the success of inflation targeting in the medium - and long - term is ensuring the soundness of financial sector, along with a central bank that can freely use its monetary policy instruments. these are just some of the important factors lying behind the restructuring efforts in the turkish financial system in this period. with the increased efficiency resulting from adjustments in financial markets, the central bank will be able to pursue a monetary policy aimed at price stability. here i would like to present some information on the monetary policy to be implemented in this transition period that will pave the way for inflation targeting in the medium - and long - term. the central bank will keep its interventions in the foreign exchange markets limited under the floating exchange rate system, but will only move to reduce volatility in exchange rates in case of excessive fluctuations. the central bank will support disinflation efforts by keeping monetary aggregates under control, and in addition, the monetary policy will be directed at achieving financial stability. the central bank will continue monitoring the targets on net international reserves and net domestic assets, which are among the basic items on its balance sheet. these targets will be set also by considering financial stability. the money creation of the central bank against the increase in the money demand will be carried out by considering the indicative path for net domestic assets. on the other hand, the bank will allow flexibility on its net domestic assets, whenever unexpected negative developments emerge in the financial system. moreover, the central bank will resort to use short - term interest rates efficiently as a monetary policy instrument through reducing net domestic assets, should disinflation process be endangered by foreign exchange movements. dear shareholders, distinguished guests and valuable press members, now let me go into some details of the draft - law amending the central bank act, which will have a greater impact on the macro - economic policies in turkey in the medium - and long - term. as you know, the draft - law, which has already been approved by the planning and budget commission at the parliament, will be debated in the parliament ’ s general assembly, probably today. the draft - law was prepared by taking account of economic developments of the last 31 years since the enactment of the central bank act no : 1211 on 14 january 1970, and the central banking norms agreed by the european union. according to the draft - law, ensuring price stability becomes the primary objective of the central bank. the central bank will have the exclusive power and responsibility in