A second, related, factor is that even where the data has been collected, in many countries the default experience is distorted by the 1997-98 financial crisis: the question for banks is to what extent this experience should be factored into their risk management systems. A third issue is the extent to which off-the-shelf models that have been developed primarily for the US market can capture the behavioural characteristics of Asian borrowers. None of these problems are in principle insurmountable. However, they do suggest that a degree of caution is in order before banks make the leap to IRB. That is why we have been advising those banks that are considering using IRB approaches to "look before you leap." The most important consideration is for banks to make sure that their IRB systems are robust and well-founded, and that they are integrated with their overall systems for identifying, managing and controlling risk, for making credit decisions, and for product pricing. We are willing to allow banks as much time as they need to achieve these objectives. The implementation dates for the IRB approaches should not be taken as a deadline. Banks that feel they need longer to work on their systems will have our full support. Getting it right matters more than a specific date in the calendar. Looking ahead, both the regulators and the industry will continue to face many challenges over the coming months and years. Putting Basel II in place has been demanding for everyone involved, and will continue to be so.
Durmuş Yılmaz: Recent economic and financial developments in Turkey Speech by Mr Durmuş Yılmaz, Governor of the Central Bank of the Republic of Turkey, at the press conference for the presentation of the Inflation Report, Ankara, 27 October 2009. *  *  *  Distinguished Guests and Members of the Press, Welcome to the press conference held to convey the main messages of the October 2009 Inflation Report, one of the most important communication tools of the inflation-targeting regime of the Central Bank. The report typically summarizes the economic framework addressed in monetary policy decisions, elaborates global and domestic macroeconomic developments and presents the medium-term inflation forecasts, which have been revised in view of previous quarter developments, along with the monetary policy stance. I would like to start my speech by underlining once more that the Central Bank’s assessments on inflation outlook and economic activity, which I will share with you in detail shortly, should be considered in the light of existing global conditions. The global crisis, which erupted in developed markets and spread across the world during the last quarter of 2008, has continued to affect the economic outlook, albeit less forcefully, during the third quarter of 2009. In this period, data releases on activity indicated that the recovery continues to gain traction with growth forecasts being revised upwards after sustained downward revisions (Figure 1).