a satisfactory level. the main reason for the delay and weakness of the improvement in the labor market despite the results taken in the other fields of economy are the structural problems in the labor market. agricultural sector leads the list of these structural problems. a rapid transition process is experienced from the agricultural sector to the sectors other than agriculture as a result of the structural change that the economy goes through. the share of the agricultural sector in total employment decreased from 38 percent in 2001 to 28 percent in september 2006. it is expected that the transition from the agricultural sector to the sectors other than agriculture within the process of structural change in our country will continue in the coming years additionally, high employment taxes observed in the sectoral structure of employment restricts the rise in employment on the one hand ; and causes employment to shift to unregistered activities on the other. the increase in the unregistered employment prevents the increases in employment to be permanent and increases volatility. working age population keeps growing due to the high rate of population growth in our country. the limited educational facilities to meet the labor power having the demanded qualifications vis - a - vis the increasing working age population and the lack of labor possessing the qualifications compatible with the structural change in the economy are the other problems detaining the possible improvements in the labor market. all these problems prevent the unemployment rates to fall in a speed parallel to the increase in employment. however, the problem of unemployment having social consequences besides economic ones renders the solution of this problem inevitable. therefore, long - term supply - side policies should be put into effect in order to find a permanent solution to the problem of unemployment. in this respect, via ensuring the implementation of active policies to create employment and providing resources for new investments, the investment atmosphere should be improved by strengthening the relationship between the real and the financial sector. additionally, educational policies oriented towards increasing the labor power compatible with the labor demand should be put into effect. besides, having the unregistered employment registered, should be given priority because it leads to unfair competition and this necessitates decreasing the taxes and other burdens on employment gradually. dear guests, finally, i wish to briefly mention current account deficit, which frequently occupies the agenda. current account deficit is one of the sensitive points of the turkish economy. with a retrospective look, we see that current account deficit grew faster in the periods when growth rate accelerated due to the structural peculiarities of the turkish economy. the periods when the current account deficit

are likely to be eased in the growth period of the economy, is of great importance. in 2005, while the maturities of assets of the banking sector were extended, the liabilities still had short - term maturities. this shows that the vulnerability against the interest rate risk and the maturity mismatch of the sector increased. in order to facilitate banks ’ interest rate risk management, it is deemed necessary to make regulations that will also allow floating rate consumer credits along with the currently available fixed rate credits. in 2005, the ratio of liquid assets to total assets decreased as a result of the continuation of the upward trend in credits. nevertheless, despite the short - term structure of deposits, especially the renewable nature of the major portion of term savings deposits, low condensation and the fact that the assets, which can be accepted by the central bank as collateral, comprise a significant part of the assets of the sector are considered risk - reducing factors with respect to liquidity management. distinguished guests, in a falling inflation environment, increasing fundamental banking activities along with banks ’ narrowing profit margins, and the rise in net wages and commission revenues, which is a more stable source of income, make a positive contribution to the diversity of assets and income of the sector. hence, they have a favorable effect on profitability performance, which has an important role in financial stability. the capital adequacy ratio of the banking sector is realized well above the legal limit of 8 percent. the capital adequacy ratio is high due to the facts that the government securities portfolio of the sector is high and the mentioned portfolio is evaluated in the zero percent risk weight category. the high capital adequacy ratio improves the resistance of the financial structure of the banking sector against shocks. the financial strength index, which provides information about the soundness of the banking sector and which has been enhanced by the sub - index of interest rate risk compared to the previous report, reached its highest level at the end of 2005. despite the declines in profitability, capital adequacy and interest rate risk indices, the recovery in the asset quality and liquidity indices were effective on this development. the financial strength index is observed to maintain almost the same level in the first quarter of 2006 as well. in order to measure the resistance of the banking sector against shocks, the development of credit and market risks were analyzed via stress tests and scenario analyses. it was found that a sufficient amount of capital was maintained for the assumed risks and the sector