Dear Guests, Today the transaction volume in derivatives markets is very much above the transaction volume in spot markets, where the trading and exchange of goods traded is realized on the same day. In 2004, the volume of daily derivatives transactions in the global foreign exchange market, excluding over-thecounter markets, was US dollar 1.2 trillion, which equals 65 percent of the total market turnover3. Dear Participants, Today we are about to bring in, and more importantly, institutionalize risk management principles and to initiate the development process of derivatives markets. This process is of great importance with respect to the overall economic activities. It should be borne in mind that this process will sometimes be arduous and time-consuming and it will also be a self-fulfilling process. Even if it takes a long time, sooner or later the derivatives markets will be established in our country. I am pleased to say that I am very happy to witness the efforts to develop derivatives markets and this achievement as well as its significance for the entire economy is a very important step for Turkish economy.
So, in short, in Sweden a situation has prevailed where subdued inflationary pressures have called for an expansionary monetary policy, while, at the same time, property prices have been surging in a fashion that in no way can be deemed as sustainable. How can, and should, a central bank in a small open economy with an inflation target deal with such a situation? The first thing a central bank can do is to engage in “open-mouth operations” and constantly remind everyone of the existence of the risks through speeches and documents. One publication that can prove particularly useful in this regard is the Financial Stability Reports, which are now published by an increasing number of central banks. By taking a systemic view of the financial system, the Financial Stability Reports investigate the collective impact stemming from the actions of individual financial institutions. By communicating these findings to market participants and the general public, the central bank can raise awareness of risks to financial stability, which might otherwise go unnoticed. BIS Review 101/2007  3  But, at times, all this may not be enough, and then the inevitable question begs to be answered – How, if at all, should a central bank let changes in asset prices influence its monetary policy? The Riksbank runs a flexible inflation target, which means that we also take the real economy into account when we set interest rates.