Today, several Turkish banks are interested in expanding their operations to the Middle East, considering the growth potential in commercial relations and considerable amount of  BIS Review 101/2010  3  liquidity in the region. Besides, the Middle East is one of the world’s fastest growing markets in the banking and capital sector. Islamic finance is yet another venue through which financial links across the countries in the region may be strengthened. The global crisis has given an opportunity to Islamic financial institutions to prove their potential. As their products limit the excessive leverage and the disruptive financial innovations, they have confirmed their products’ advantages to ensure macroeconomic stability. This may lead the way for Islamic financial institutions to further expand and improve. Islamic banks support GDP growth through the use of funds they collect exclusively for the financing of real sector, rather than investing in nonproductive financial assets. This understanding will not only contribute to the potential growth of the Islamic banks, but also help to maintain a sound structure of the financial system. I believe that such a forward-looking and constructive vision will contribute the financial stability to a great extent going forward. One crucial prerequisite for closer commercial links within the region is the existence of strong, efficient and effective payment system. In the last twenty years, rapid technological progress, decrease in restrictions and globalization of financial markets have led to a rise in financial activities and a rapid growth in the volume of domestic and cross-border payments.
Average annual growth of almost 7 percent between 2002 and 2007 faltered in 2008 and turned into a contraction in 2009 as the exports and investment flows dried up considerably due to the global crisis. However, all signs now indicate that the economy has rebounded quickly and is headed towards renewed growth and an improving fiscal balance in 2010. The resilience of the Turkish financial system, combined with our flexible and effective liquidity management framework shaped by the experiences of past crises, has turned out to be considerable assets in managing the recent crisis. As a result, growth forecasts of international institutions for the Turkish economy have been revised upwards repeatedly and reached as much as 7.2 percent, the highest among OECD countries. The crisis and slowly emerging global architecture in its aftermath present major opportunities that have once again highlighted the importance of economic cooperation  2  BIS Review 101/2010  and coordination among countries and economies. In the case of the Middle East this is perhaps best embodied in the multiple synergies in financial integration and joint investment opportunities between Turkey and the Arab world. It is a great pleasure to see that the relations within our region have been strengthening on a solid ground. The strong historical, cultural and social ties among our countries constitute a solid basis to further develop multilateral relations.