•  Sound fundamentals include a high domestic savings rate, sustainable fiscal and balance of payments positions, high foreign exchange reserves and prudent debt management. •  Good supervision involves the maintenance of solid capital adequacy and liquidity requirements for the financial sector, as well as regular examination and monitoring of financial institutions and markets. The banking system must have the capacity to avoid excessive credit concentrations and risks, and to manage market risks well. •  A robust financial infrastructure would encompass an efficient payments and settlements system for domestic and international transactions. In essence, the world is moving towards Real Time Gross Settlement (RTGS) system, which support Delivery vs. Payment (DvP) and Payment vs. Payment (PvP). RTGS reduces payment risks and allows central banks to monitor flows in domestic currency as well as exposure of banks on a real time basis. •  A non-distortive incentive structure, such as taxation or regulatory restrictions that would not encourage risk concentrations or excessive leverage in any economic sectors. 22. Put simply, managing national risks is equivalent to achieving three objectives. First, lower national gearing, because leveraging adds risks, especially if this is leveraged from external borrowing. The more you borrow abroad, the more you become vulnerable to external shocks. Second, the higher the level of domestic savings, which should be reflected in higher bank capital, lower credit/GDP ratio, and higher fiscal surpluses, the greater the resilience to the pain of adjustment to external or internal shocks.
The fact that a wide range of important decisions on issues ranging from food and energy safety to repair and reconstruction of the financial system are made at the G-20, of which Turkey is an active member, clearly suggests that the global economy’s center of gravity is shifting. Corresponding to the ever-increasing importance of the G-20, the weight of Turkey and her peer developing countries in international institutions, such as the IMF, is increasing as well. In his statement in the late 2010, IMF Managing Director Dominique Strauss Kahn described the changes in the Fund’s quotas and governance “the most fundamental governance overhaul in the Fund’s 65-year history, and the biggest ever shift of influence in favor of emerging markets and developing countries”. Once the IMF’s 14th General Review of Quotas is completed, Turkey’s share in the IMF’s total quota will be more than doubled compared to 2004. Their outstanding economic performance and rapidly increasing share in the global economy over the past decade have considerably helped developing countries to have an increasing voice in the international arena. These countries, among which Turkey, with its economic performance, stands as one of the leading countries, have weathered the recent global crisis with less damage compared to developed countries and exhibited better performance in reverting back to pre-crisis production levels and growth rates. Recently, there have been debates about whether the developing country group has decoupled from developed countries.