The main points of monetary policy under this program were as follows: ·  The Central Bank set a ceiling on increases in net domestic assets. ·  The Central Bank paid close attention to keeping increases in reserve money in line with increases in demand. Open market operations were actively used during the year to mop up excess liquidity created by the increases in our net foreign assets. ·  The Central Bank monitored exchange rates throughout the year, with special attention to maintaining stability in the foreign exchange market. ·  Continuous domestic borrowing by the Treasury made a positive contribution to achieving all targets. ·  Turkish lira interests rates were determined mainly by the borrowing strategy of the Treasury. The Turkish Central Bank has played no direct role in the determination of interest rates. In an economy with market-determined interest and exchange rates, where a persistent public deficit is being financed mainly through the domestic markets, the monetary policy tools available to the central bank are few and of limited effectiveness. As noted above, interest rates are determined primarily by the borrowing activities of the Treasury. By the same token, foreign exchange rates are determined as a function of the external trade deficit (itself a function of growth) and the level of interest rates. Under these conditions, the central bank is absolutely obliged to keep the items on its balance sheet under careful control.
Coming to a concrete and operational perspective, I will first give a few personal suggestions on how the resolution framework could evolve over the coming years (I), and then highlight why and how supervision and resolution authorities should work more closely with one another (II). I. How resolution could evolve over the coming years Resolution currently stands as the only harmonised crisis management framework at EU level, and is therefore a public good to be preserved and enhanced. After seven years of determined preventive action and two successful resolution decisions, the SRM is entering a more mature phase where it can start contemplating how resolution may evolve, taking advantage of the upcoming revision of the crisis management framework. Primarily, we should broaden the scope of banks that could be subject to resolution measures, by considering the regional impacts of a failure in public interest assessments (PIAs). The SRB and some national resolution authorities have already taken a first step in this direction. I very much welcome this evolution, which in my view could go one step further to enable medium-sized banks to be subject to resolution measures if their PIA concludes that there is a public interest in doing so. We would naturally have to determine the criteria for identifying medium-sized banks, and for excluding small banks whose limited footprint would never justify resolution. Furthermore, instead of focusing exclusively on bail-in, resolution planning should ensure that the whole range of currently available tools are considered.