Closer examination of procyclical effects of credit market developments and the treatment of risk embedded in structured products held for trading is also warranted. The Deposit Guarantee Schemes, in the light of recent events, also need to be revisited. This is a piece of advice I would most urgently give to the authorities of this country with its unfunded DGS. BIS Review 120/2007  9  Last but not least If there is one major lesson recent market developments have clearly shown, it is the shortcoming of a prudential framework which sidelines the central bank. Cooperation at international level is only as good as cooperation at domestic level. Liquidity issues cannot be segmented between an FSA and a central bank with no contacts of an institutional nature. With this personal remark for domestic consumption I thank you for your attention. 10  BIS Review 120/2007
Including the portion of shares of non-residents in some banks, which have been agreed upon, although the legal permit process thereto has not been completed yet, the share of non-residents in total assets has reached over 16 percent. Comparing the ratio of assets of the banking sector to the GNP in Turkey to those of developed countries, it is seen that Turkey ranks considerably lower on the list. As long as the favorable developments continue, the banking sector should grow in parallel or, even more. However, it is obvious that in a sector so capitalintense, achieving growth will not solely be domestically. I believe that foreign capital inflows to the banking sector should be handled within this framework. In 2005, while the balance sheet of the banking sector grew in size, the share of TL-denominated assets and liabilities increased. As the crowding-out effect of the public sector diminished, the share of credits in assets continued to increase. This indicates that the banking sector has come close to its fundamental function. Despite the fact that the rapid upsurge in credit volume has increased the credit risk, the decline in the NPL ratio and the high provisioning policy adopted by the sector during the same period are considered as favorable developments. Meanwhile, the monitoring of credit risk,  BIS Review 68/2006  3  which may increase due to the policies on credit allocation that are likely to be eased in the growth period of the economy, is of great importance.