But longer-term, the challenge for all organisations is this: to put in place a more system-oriented approach to recruitment and performance management, which weighs diversity explicitly and systematically. We are not close to being there yet. This would be a leap of faith. But it would not be a leap into the unknown given the known benefits such diversity confers. Conclusion We are all Sneetches, some with stars, some without. The sooner we recognise that our minds are biased, the better placed we will be for dealing with its consequences. Diversity is a public good because it corrects our biased minds in ways which benefit society – from greater creativity and innovation to more robust and resilient decision-making, in every social setting from schoolrooms to sports fields, from companies to communities, from eco-systems to economies. This public good, like all public goods, requires an on-going investment. Society has made a real investment in identity-based diversity over the past few years. So too has the Bank. That first diversity wave is reaping significant societal rewards. There has probably never been a better time for making progress on creating that second diversity wave, one which cultivates the subtle, but as important, cognitive and socio-economic dimensions. While leopards can’t change their spots, Sneetches can change their stars.
In such a case, the policy makers are left in a big trade off between monetary policy independence and balance sheet mismatches 7 . Obviously, there is not one single commonly accepted solution for all countries. Nevertheless, country experiences in recent years have shown us that there is a tendency in choosing more flexible exchange rate regimes under the assumption that vulnerabilities regarding mismatch problems are accurately hedged. Subsequently, dollarization affects monetary policy through the increased volatility of money demand. Thus, the traditional transmission of monetary policy would not work properly as central banks have no direct control over foreign currency assets. Accordingly, as Kevin Cowan and his colleague 8 mentioned in their study, dollarization limits the capacity of central banks to conduct stabilizing monetary policy in the short run and to a large extent limits the ability of monetary authority gain credibility in the long run. Distinguished Guests, Having given a brief introduction into the notion of dollarization, now I would like to talk about the Turkish case. As in the evidence of the other countries, the dollarization in Turkey also took its roots from macroeconomic instability with fixed or predictable exchange rate regimes, inefficient market regulations and the lack of credibility of economic policies. In order to comprehend the dollarization in Turkey better, it would be reasonable to look at the macroeconomic instability and examine the evolution of dollarization in a historical perspective.