. needless to say, the course of commodity prices has implications on many other key macro variables. for example, as a net energy - commodity importer, turkey ’ s dependence on energy imports makes the current account balance more sensitive to volatility in commodity prices. recent uncertainty surrounding the energy market is not comparable to any other period in the near history. moreover, there is a significant risk that commodity prices stay volatile due to uncertainties regarding global economy and the exceptionally loose monetary policies across the globe. therefore, medium - term outlook for commodity prices is unusually hard to predict. in the long term, supply conditions and structural policies should adjust to stabilize the energy and other commodity prices. the recent concrete steps as part of the medium term programs in turkey, aiming at curtailing the dependence on energy imports by switching towards domestically produced and renewable energy sources, have important implications also for decreasing the sensitivity of current account balances to international price movements. the key question here is how to smooth out the impact of the volatility in energy and other commodity prices on the domestic economy in the short to medium term, while there is a heightened degree of uncertainty regarding financial and real factors. introducing a fixed element into the sales tax on gasoline or other energy prices might be an effective method in dealing with this issue. in the case of turkey, for example, there are two types of taxes on the retail gasoline prices. the first one is the vat that is proportional to the price ; the second one is the special consumption tax ( sct ) that is a fixed tax. the sct forms a significant portion of the retail gasoline prices and attenuate the volatility of final prices that consumers face, since it is not a proportional tax. this tax structure not only smooths out the fluctuations in retail gasoline prices but also avoids the need for subsidies, discretionary choices and associated fiscal costs. this conference serves as a perfect platform to discuss alternative methodologies on these issues. once again i would like to welcome you all to istanbul and hope that we will address some of the challenges regarding commodity prices and the global economy in this meeting. thank you. bis central bankers ’ speeches

durmus yılmaz : central bank achievements and opportunities in turkey speech by mr durmus yılmaz, governor of the central bank of the republic of turkey, to members of the press at the central bank of the republic of turkey, ankara, 18 april 2006. * * * dear press members, i have been appointed governor of the central bank, which was vacated by former governor mr. sureyya serdengecti due to his retirement after having completed his five - year term on 14 march 2006 at the end of the business hours, and which has been filled temporarily by dr. erdem bascı as acting governor since then. i have worked in various positions of the central bank of the republic of turkey since 1980. as you have been closely following, many achievements have been made since then, especially in the last couple of years, that will always be remembered as the turning points in our economic history. distinguished members of the press, as a result of the legal amendments made in 2001, the greatest achievement in the area of monetary policy has been the attainment of the “ central bank independence ”. accordingly ; “ the bank shall, with the objective to achieve and maintain price stability, be authorized to utilize monetary policy instruments described in this law and shall also be authorized to directly determine and implement other monetary policy instruments that it deems appropriate. ” as expressed in the law on the central bank. such an authorization is called “ instrument independence ” in the modern economic literature. on the way to price stability, the inflation target is determined jointly with the government. as you know, these targets have been determined and announced as follows : 5 percent for 2006, 4 percent for 2007, 4 percent for 2008 our primary objective is to attain these targets. the central bank will support the growth and employment policies of the government, unless it conflicts with this objective. likewise, with the law no : 1211, the central bank has been entrusted with the power of establishing the “ exchange rate regime ” jointly with the government. the floating exchange rate regime, which was introduced within this framework, will continue to be implemented, preserving its basic implementation framework. turkey has grasped a golden opportunity to get rid of the damage created by inflation with which it has had to live more than 30 years. the period of “ declining inflation ” is about to end. our next objective will be to achieve and preserve the price stability. this will be the most significant contribution of the central bank in mob