§  Progress in these areas, even if only incremental, will have important implications for what is possible and necessary in the future. For example, having stronger bank and corporate balance sheets, with lower leverage, expands the scope for using interest rates and asset price adjustments as stabilizing devices. Better liquidity management at both the micro and macro levels - - longer maturities, and greater reserve coverage and back-up financing - - will create margins to ride out financial shocks. And more  5  effective insolvency regimes would make decentralized workouts more feasible, particularly in cases where systemic stress is better contained. •  The approach to crisis management and resolution also needs to be creative. In part, this can be accomplished by relying as much as possible on the efforts of debtors and private creditors to work things out on their own. The perception in some circles that private creditors are not interested in resolving payment problems expeditiously is mistaken, and stands at odds with recent experience. If nothing else, investors are interested in restoring liquidity to debt instruments in order to move on to new opportunities. There is also scope for exploring creative market-based ways to lever in private participation and stretch the impact of public sector funds. G  •  The various experiences since the late 80s with buybacks, partial guarantees, and debt exchanges provide some hints for how targeted deployment of public moneys can spur tendencies in a direction consistent with public policy goals.
Turkey has a good record for structural issues. We have liberalized the trade and capital accounts of the balance of payments for about two decades. We have a flexible labor market. High domestic savings is one of the main characteristics of the economy. Market oriented economy is another aspect of the structural component of Turkey. Right now, Turkey has four important structural reforms on its agenda, not only as a part of the disinflation effort but also because they are essential for changing the environment. Thus, these structural reforms are vital for adapting to the changing global environment. They consist of reforming the banking sector, the social security system, agricultural subsidies, and privatization. Some of these reforms have already been approved by parliament, and the others are in the pipeline. The new Banking Act which was approved by parliament in June has the following four general objectives: •  to close the legal loopholes;  •  to implement the international supervisory regulations;  •  to assign the supervision of banking organizations to an independent agency; and  •  to make some adjustments regarding the process of founding and operating banks. In particular, the twenty-five Core Principles for Effective Banking Supervision drawn up by the Bank for International Settlements in 1997 have been endorsed in the amendments to the Banking Act. As a result, the amendments are consistent with modern principles of effective banking supervision.