Between 1997 and 1998, countries of South-East Asia experienced this effect, when all of a sudden capital flew out, bringing about financial crisis in economy after economy, which could not be prevented by either the monetary or exchange rate policy. Re 4) One of the vital dimensions of globalisation is the fast spreading of knowledge, technology and knowhow. The flow of know-how also applies to the public sector, including the central bank. One of the features of modern central banking is gradual homogenisation of the strategies applied to the monetary policy. Since 1990, when for the first time the central bank of New Zealand started to implement the strategy of direct inflation targeting (DIT), over 20 central banks followed and adopted that strategy. As a result, the DIT strategy (applied since 1998 by the NBP) is now the dominating strategy of the monetary policy, applied by the majority of central banks in developed countries 22 , and more and more, by central banks of the developing countries (such as Turkey, the Philippines, Ghana, Romania and Armenia). A bloom of the DIT strategy endorses the observation that central banks adopt the “technology” of low and stable inflation from one another. The dissemination of the DIT strategy was accompanied by a decrease in the average inflation level, especially in the developing countries that lowered inflation from a high level. This may prove that the dissemination of the DIT strategy was one of the factors that have contributed to disinflation.
From 1990 to the end of 2001 the ratio of foreign exchange deposits to total deposits increased from the level of 25.5 percent to 57.6 percent; the share of foreign exchange deposits in broad money supply went from 19.7 percent to 55  6  Arteta, C. O. (2002); “Exchange rate regimes and financial dollarization: does flexibility reduce bank currency mismatches?” International Finance Discussion Papers 738; Board of Governors of the Federal Reserve System. 7  Frankel J.; Schmukler S.L. ; Serven L. (2004); “Global transmission of interest rates: monetary independence and currency regime”; Journal of International Money and Finance; Vol.23 p.701-733. 8  Cowan, K.; Quy-Toan Do. (2003); ”Financial Dollarization and Central Bank Credibility”; World Bank Policy Research Working Paper No.3082. BIS Review 124/2006  3  percent. Similarly as of 2001, the share of foreign currency loans in the total loans of the banking sector reached to 47.2 percent, while the share of foreign currency denominated and indexed debt of the government in its total domestic debt increased to 36 percent 9 . As of 2001 Turkey became one of the most dollarized economies in the world. Distinguished Guests, Dollarization process in Turkey has two striking characteristics. First of all, dollarization rose significantly even the real rates of return on foreign exchange deposits were lower than that on the Turkish currency deposits. This indicates the fact that the political and macroeconomic instability in the country, particularly high inflation and inflation uncertainty, had played the major role in the dollarization process.