revealed several weaknesses in the global financial system. above all, it became clear that the banks had too little capital in relation to their risks and that the liquidity risk at the banks was too high. moreover, the collapse of the investment bank lehman brothers demonstrated how difficult it is to manage very large institutions that experiences problems and to avoid the problems spreading to other banks and having negative repercussions on the financial markets. the intention is that basel iii should capture the risks in the banking system better than the previous regulatory frameworks and thereby reduce the likelihood of new financial crises. basel iii is thus a reaction to the fact that previous regulations were inadequate. the basel iii regulatory framework was published for the first time in its entirety in december 2010. since then, the basel committee has worked to finalise the regulations. beginning in 2013, basel bis central bankers ’ speeches iii will gradually replace earlier basel regulatory frameworks. in sweden, basel iii will be incorporated through eu legislation. more capital and larger liquidity buffers will increase resilience put simply, basel iii is founded on four measures that act as instruments for assessing various risks in the banks. on the basis of these measures, the framework then stipulates certain minimum requirements, for example how much capital a bank must hold. the first measure is the risk - based capital measure, which is what we normally refer to when we speak about capital requirements. the risk - based capital measure was already a part of previous regulatory frameworks, but in basel iii it has been made much stricter. in addition to this there are three new measures : a complementary capital measure, the leverage ratio, and two liquidity measures. the latter are a measure of short - term liquidity – the liquidity coverage ratio ( lcr ) – and a structural measure of liquidity risk, the net stable funding ratio ( nsfr ). today, i intend to focus on the leverage ratio and the nsfr. the reason for this is that the basel committee has made considerable progress on these measures this year. however, before i do this i would like to briefly describe the risk - based capital requirement and the lcr, as when i speak about sweden and swedish conditions later i will cover all of the measures in basel iii. let ’ s begin with the risk - based capital measure, which measures a bank ’ s capital in relation to its risk - weighted assets. this is the part of basel iii that was finalised first and it is already being applied in

. ahead of the june mpc meeting, we determined two important agenda items to strengthen the effectiveness of monetary policy. the first one is to reduce the spread between market rates and the policy rate. before our first mpc decision in june, the average deposit rate was above 40 % while the policy rate was 8. 5 %. as part of the june mpc decision, in addition to the rate hike, we took the first step for the simplification of the macroprudential framework in deposits, via the securities maintenance practice. 6 / 11 bis - central bankers'speeches shortly following these steps, the interest rate on deposits with a maturity of up to three months decreased by approximately 12 points to 30 %. we started the process with deposits because they are the most binding constraint of the banking sector and adversely affect the functionality of markets as well as price behavior. thus, the simplification process in the macroprudential framework, in addition to the rate hike, has increased the effectiveness of the policy rate in a balanced manner. our second agenda item is to rein in the inflationary effects of the acceleration in retail loans. in the first six months of 2023, retail loans rose at rates exceeding 70 % in credit cards and 68 % in vehicle loans. in total, retail loans increased by 40 %, exceeding 2 trillion turkish liras. the growth rates in the first and second quarters of this year are more than three times higher than the last ten - year average. credit expansion fuels domestic demand, deteriorates expectations, and increases imports and the current account deficit. with our july mpc meeting decisions on the rate hike as well as on selective credit tightening as part of monetary tightening, we contain the effects of credit expansion on inflation. in addition to credits, we also sterilize liquidity through quantitative tightening, thereby enhancing the effect of rate hikes. to sum up, in our monetary tightening process, we are making the gradual and steady rate hikes more holistic and stronger through quantitative tightening and selective credit tightening. with the decisions we took at the june and july mpc meetings, we have raised the policy rate by a total of 900 basis points, from 8. 5 % to 17. 5 %. thus, the policy rate has more than doubled in two months. with our decision to simplify the securities practice, deposit rates have declined while our policy rate has increased. deposit rates have come to levels more aligned with inflation expectations. however, we also