In economic literature, capital outflows following the developments of this kind are called “sudden stops”. Turkey and many other developing countries have occasionally experienced such sudden stops. Keeping excessive volatility and international capital flows under control is crucial for financial stability. In this respect, macroprudential measures stand out as an important tool. The monetary, fiscal and financial sector policies adopted by advanced economies in the wake of the global economic crisis exposed even open developing countries with sound economic fundamentals to financial instability risk. The Central Bank of the Republic of Turkey, in view of this risk, safeguarded both price stability and financial stability simultaneously by adopting a flexible monetary policy, and thus contributed to the sustainable development path. In addition to the flexible monetary policy strategy implemented by the Central Bank as of the end of 2010, the prudent measures adopted by the BRSA accompanied by the safeguarded fiscal discipline strengthened the Central Bank’s hand. We firmly believe that we will attain very positive results with respect to price stability and financial stability by the end of 2012. Along with national macroprudential measures introduced by countries, some international criteria have also been developed for the sake of safeguarding financial stability. For example, the Basel III accords bring about new arrangements reinforcing the capital structures of financial institutions. These arrangements will ensure a more resilient financial sector against unforeseen risks and will contribute to financial stability. The recent efforts clearly point to a consensus among countries on the critical importance of safeguarding financial stability.
But since 1995, the gap has started to widen again as ICT investment has boosted productivity growth in the United States. The empirical evidence suggests that one of the most successful ways to speed up convergence in productivity is to promote international trade and investment, and openness more generally. Within manufacturing, the rate at which the productivity gap between Britain and the US closed during the 1980s and early 1990s was greater in the more open than the less open sectors. Against that background, let me suggest three areas for questions: First, why is the gap in the level of productivity between the US and the UK so persistent? And what are the obstacles that prevent the gap from narrowing - are they in the fields of trade, technology transfer, or flows of investment? What are the respective roles of business and government in removing them? Second, can the UK benefit as much as the US from the IT revolution? Is it a question of the speed with which business adapts? Or is it the need to fund our research-based universities on the scale of the best elsewhere in order to exploit our comparative advantage in the English language and regain Britain’s place at the frontiers of knowledge? Or is it a matter of raising standards of education in schools to enable the workforce as a whole to use the new technology?