s liquidity management is fairly flexible and wellstructured to fulfill its lender - of - last resort role and meet both new turkish lira and foreign exchange liquidity requirement of the banking system effectively. we have acted promptly to contain the adverse effects of the global financial turmoil on the domestic economy. to ensure smooth operation of the new turkish lira money markets and to contain the potential volatility in short term interest rates, the monetary policy committee, judging that inflation will display a more rapid fall than envisaged before, has lowered the borrowing rates by 50 basis points and the lending rate by 100 basis points on november 19, 2008. this allowed the margin between the lending and borrowing rates to be reduced by a further 50 basis points. we are also aware of the significance of foreign exchange liquidity in the banking system and progressively put into effect necessary measures in order to get through this period with minimal damage. to that end, we have resumed our role to act as an intermediary in the fx deposit market as of 9 october 2008, and later doubled the transaction limits to 10. 8 billion usd. during times of confidence breakdowns among the participants of the financial markets, central banks can serve as a blind broker to intermediate in the foreign currency lending market. in this fx deposit market, banks can post their bids for foreign exchange without disclosing their identities. it also acts as a market of last resort as the banks can borrow directly from the central bank. along with the above - mentioned measures, we have also extended the maturity of the fx deposit borrowed by the banks from one week to one month, and reduce the lending rate from 10 percent to 7 percent for usd and 9 percent for euro in the fx market. needless to say, as the high level of volatility in global financial markets prevails, the central bank of turkey will sustain its vigilance and will stand ready to take additional measures prudently within its means in order to ensure the smooth functioning of the financial system. dear colleagues, in the last part of my speech, let me say a couple of words about the current financial turmoil. this recent episode provides a good example of how, in a financially integrated environment, a country specific shock can spill over rapidly to seemingly distant markets and countries. the problems, which started in sub - prime mortgage markets in the united states, have spread to the whole financial system all around the world and reached a point that threatens the global economic stability. this shows

that countries share not only benefits of financial integration but also the risks associated with it. in my opinion the most important lesson that we should derive from the current turmoil is the need for a global lender of last resort mechanism. in addition, with the cooperation of local and international authorities an early warning system should be constructed so that the fragilities in the international financial system would be identified and necessary and sufficient measures to fix them would be taken beforehand. in this context i believe that effective and efficient risk management and re - regulation will be the cornerstones of the new global financial architecture where the financial intermediation should not let the direct relationship between lender and borrower to be cut completely under various forms of effective risk diversification and securitization. sound domestic policies for a healthy banking sector are necessary but not sufficient for addressing contemporary challenges of the global world. in this respect, improving policy coordination at the regional and international level is a must. only then, we would be able to attain the optimal level of international financial regulatory rules and guidelines together with adequate tools that would match the complex nature of the international financial markets. with this consensus in mind, g - 20 leaders at their summit in mid november, agreed upon an important set of principles on reforming the international financial architecture. we strongly support the promotion of these principles that include strengthening transparency and accountability, enhancing sound regulation, promoting integrity in financial markets, reinforcing international cooperation and reforming international financial institutions. we must lay the foundation for reform altogether to ensure that a global crisis, such as this one, does not occur again. thank you.