##mic first hit the global supply chain and production. then, mounting uncertainties, tighter financial conditions, household income losses and worsened cash flows of businesses caused demand to weaken substantially. lockdown measures around the world caused services activity to decline rapidly in march 2020. in the following period, the slowdown also spread to the manufacturing industry as global trade contracted. both advanced and emerging economies saw a negative decoupling of the services sector due to pandemic measures. this trend appears to be in stark contrast to the 2008 crisis. as the services sector is a labor - intensive sector, the cost that the pandemic imposed on employment has been much higher than that of the financial crisis of 2008. in this process, central banks all over the world took extraordinary expansionary policy measures such as interest rate cuts, asset purchases, liquidity steps and credit support programs. the experience of policy makers in unconventional monetary policy after the 2008 crisis and the expansion of the toolkit has made a positive contribution to the policy response to the pandemic. central banks of advanced and emerging economies used the existing policy space without hesitation and promptly, and cut policy rates as a first response to the crisis. central banks also reintroduced bond purchases that they had included in the post - crisis toolkit. it is noteworthy that emerging market central banks also resorted to bond purchases, unlike in the 2008 crisis. central banks have provided more funding through repo transactions and extended the maturity of funding to prevent liquidity squeeze in the money market and to facilitate access to liquidity. in this period, when economies came to a standstill, this intervention by central banks was appropriate and vital for the functioning of the financial system. globally, policy rates have been rapidly lowered and the average interest rate in both advanced and emerging economies has fallen below the levels in the 2008 crisis. the central bank of the republic of turkey was one of the central banks that cut their policy rate in the said period. the rapid policy rate cuts on a global scale were accompanied by massive asset purchasing programs led by advanced economies and rapid balance sheet expansion. meanwhile, the speed of asset purchases has outpaced the previous crisis. the objective of the financial policies introduced to provide liquidity to the banking sector was to protect the fiscal structure of the financial sector and to ensure credit flow to the private sector. many central banks provided additional liquidity to the banking system by lowering reserve requirements and easing capital and liquidity buffers. with the regulations introduced, existing loan payments of the

the - envelope calculation. the export sector is about one - fifth of the economy. the terms of trade are at present about 60 per cent higher than their average level for the 20th century, and about 80 per cent higher than the outcome would have been had they been on the 100 - year trend line. this means that about 12 – 15 per cent of gdp in additional income is available to this country ’ s producers and / or consumers, each year, compared with what would have occurred under the average or trend set of relative prices over the preceding 100 years ( all other things equal ). that will continue each year, while the terms of trade remain at this level. of course, part of this income accrues to those foreign investors who own substantial stakes in the mineral sector. in this sense, the current boom is a little different from the early - 1950s one where most of the income went first to australian farmers. nonetheless, a good proportion accrues to local shareholders and employees, and to governments via various taxes. a non - trivial part of it is available to consumers as higher purchasing power over imports, as a result of the high exchange rate. it does not take much imagination to see that an event of this magnitude is expansionary. incomes are higher – in some cases a lot higher – and, absent some offsetting force, some of that will be spent. so it has always proved in the past. moreover, if, as seems very likely, these prices prompt a build - up in investment to supply more of the commodities concerned, there are further expansionary effects. even applying significant discounts to stated investment intentions, as the reserve bank staff have done in their forecasts, there is likely to be a further significant rise in business investment over the next few years, from a level that is already reasonably high as a share of gdp. on all the indications available, we are living through an event that occurs maybe once or twice in a century. so a very important question for us is : how do we handle all this? we obviously have to be wary of overheating. the bank has given its views on this point before and i will say no more about that tonight. in fact, fitting a trend to the data for the 20th century shows a statistically significant downward trend of about 0. 2 per cent per annum on average. prebisch ( 1950 ) and singer ( 1950 ). but in fact the issues are broader than that. they extend to how