accordingly, the central bank of turkey was granted independence by the parliament in may 2001, as a response from the society to the previous 30 years of bad experience. since it takes time for the policy decisions to bring the intended results, economic agents must be patient for the policies to fully work out. if policies are changed in the middle, we are back to square one again. but the literature on time inconsistency has taught us that the change in the policies tends to occur in an untimely manner. therefore the central bank independence means to eliminate the inconsistency between short - term temptations and full implementation of the designed optimal policies. the amendments that granted the independence to the central bank in 2001 also prohibited granting advances and extending credits to the treasury and other public institutions. the central bank cannot buy government securities from the primary markets. the new law entrusts the bank with the single mandate of achieving and maintaining price stability, and with instrument independence. by law, the central bank shall support the general economic policies provided that they do not conflict with the price stability. at this stage, it is impossible not to agree with president trichet, in this statement : “ the undesirable social and economic consequences of inflation, namely inefficient allocation of resources, high levels of interest rates, the regressive inflation tax, arbitrary redistribution of income and wealth to the detriment of the most vulnerable, and, last but not least, economic instability, lower growth and lower job creation, are the benchmarks against which one has to assess the social benefits of price stability. this is why a credible commitment to maintaining price stability is so important for the living standards of european citizens. ” 1 together with its independence, the central bank of turkey was set to be accountable in various ways. in this sense, according to article 42 of the law on the central bank of turkey, we are accountable to communicate with the government and with the public if inflation deviates excessively from the target, or even a possibility of deviation becomes evident. moreover, in line with the transparency principle, we have started to give more importance to sharing our views about the general economic outlook, current inflation and inflation outlook and informing about monetary and exchange rate policies through press releases, announcements, reports and every other means such as press meetings, interviews, speeches and presentations. the law also set up the monetary policy committee ( mpc ). having got the instrument independence, the central bank moved from implementing

##bilities and suspending the upward trend in the loan to deposit ratio ( chart 7 ). in order to reduce the intermediation costs of the banking system and provide additional support to core liabilities, we raised the remuneration rates on tl required reserves by 50 basis points each month in september, october and december 2015. additionally, we made some adjustments to the coverage of reserve requirements on 9 january 2016. accordingly, some funds at participation and investment banks were made subject to reserve requirements and the coverage of non - core liabilities was expanded. bis central bankers ’ speeches chart 7. maturities of non - deposit liabilities ( percent ) chart 8. rom reserves, fx deposit facility and external fx liabilities of the banking sector due in 1 year ( billion usd ) source : cbrt. source : cbrt. in the road map released in august, we also included some measures to enhance the flexibility of the foreign exchange liquidity management. to this end, we hiked the transaction limits for banks at the cbrt foreign exchange and banknotes markets on 1 september 2015. consequently, the sum of fx deposit limits allocated to banks and gold and foreign exchange assets held at the cbrt under the reserve option mechanism ( rom ) reached a level that is considerably above the external debt payments of banks which are due within one year ( chart 8 ). moreover, in the “ monetary and exchange rate policy for 2016 ”, we announced further steps to strengthen the stabilizing feature of the rom. all these measures taken in line with the road map have increased turkey ’ s resilience against global volatility. amid an economic environment fraught with prolonged global uncertainties, it is important to contain negative spillovers into the turkish economy. in terms of the fundamentals of the economy, the significant improvement in the current account balance over the past few years, reasonable growth rates in loans and a loan composition that supports price stability and financial stability all contributed to reducing economic fragilities. these developments were due to the tight monetary policy and the measures taken regarding financial stability as well as the sharp fall in commodity prices in the case of the current account balance. moreover, the effective use of the measures presented in the august road map has alleviated the excessive fluctuations in exchange rates and loan rates. our current tight monetary policy reduces the economy ’ s sensitivity to global shocks, thus supporting financial stability. we maintain the view that the tight monetary policy may be implemented within a narrower interest rate corridor, should the