consolidation while mas welcomes the process of consolidation, it will remain strictly neutral, and will not seek to influence the outcome. we have made it known to all the participants that we will allow the local banks to bid for one another. the new configuration should be determined by the free play of the market. mas will leave the banks and their shareholders to decide whom they should merge with or acquire, subject to five conditions being met : a. first, the banks should have the capability to achieve effective integration following the merger. the management of the acquiring bank must understand the financial, operational, and cultural issues involved in integrating two entities and have a credible plan in place. b. second, the merger must not impair the bank's financial soundness. in particular, the bank must meet mas ’ capital adequacy requirements at all times. consolidation should not compromise the safety and soundness of the bank. c. third, we will consider the impact of the merger on competition. consolidation should not lead to the emergence of one or a small group of overly dominant banks, which are in a position to engage in monopolistic or other anti - competitive behaviour. d. fourth, the consolidation should not lead to loss of service for small depositors, for whom affordable banking services are a necessity. e. fifth, any cross - border partnerships should not result in the foreign partner taking control of a singapore bank. i will elaborate on these five considerations in turn. managing the integration consolidation, whilst necessary for the local banks to be competitive, is not in itself sufficient to produce strong banks. having merged, the banks will have to integrate and rationalise different management teams, information and risk management systems, and internal control procedures. the reality is that some mergers work while others do not. good execution of a merger will produce a stronger bank, by yielding the expected synergies and cost savings. poor execution will only lead to a more unwieldy and riskier bank. a larger scale and wider range of activities will demand stronger and more institutionalised management. singapore banks have benefited from having their principal shareholders, including family shareholders, play an important role in overseeing the banks, although most no longer run the management. the controlling families have had the entrepreneurship and business acumen to build up the banks, and their long - term interests were substantially aligned with those of the banks. this situation currently serves us well, but is not likely to endure over the longer term. the ongoing consolidation, the

government securities ; and various one - off measures, including raising the rates of personal income taxes, corporate taxes, and property and motor vehicle taxes. these revenue measures were accompanied by spending cuts as well. for example, the social security reform law passed by the parliament last fall is expected to save 0. 5 % of gnp in social security expenditures in 2000. as a result of the improvement in the primary balance, and the increase in privatization receipts, some of which can be used to retire public debt, the cash debt - to - gnp ratio is expected to level off at around 24 % this year and to begin a gradual decline in coming years. privatization proceeds are expected to reach us $ 17. 7 billion over the program period. a number of important measures have been taken to ensure that this ambitious goal is met. the constitution has been amended to allow for international arbitration between the turkish state and foreign investors. a streamlining of the regulations governing operations in the energy and telecommunications sectors is expected to attract privatization, and parliament is even now considering the necessary enabling legislation, which will be enacted very soon. these actions in the fiscal, privatization and structural reform areas are a part of the front - loading mentioned above, and the authorities have already taken most of the measures. now let me turn to the program ’ s nominal strategies, most of which are the responsibility of the central bank. in an economy like turkey ’ s, where inflation has a long history, expectations and inertia play important roles in the inflationary dynamics. this represents a major problem for the program, which needs to be addressed thoroughly. since exchange rates have high public visibility, there was a broad consensus in turkey that using the exchange rate as a nominal anchor would be an effective tool for interrupting the public ’ s inflationary expectations based on the past. in addition, the openness of the turkish economy to capital movements makes the commitment to an exchange rate anchor particularly effective in affecting nominal interest rates. accordingly, the exchange rate regime has been designed to provide clear signals as a basis for price and interest rate expectations, while avoiding the medium - term drawbacks experienced in the medium term by some of the other countries pursuing exchange rate based stabilization. here is how exchange rate policy will be conducted during the program period. we are already announcing to the public the daily value of an exchange rate basket consisting of us $ 1 and euro 0. 77 for the coming 12 months. the monthly depreciation rate of the basket adds up to a