Erdogan briefs G-20 on financial sector reforms

Prime Minister Recep Tayyip Erdogan last week delivered a speech on Turkish financial sector reforms at the G-20 summit hosted by US President Barack Obama in Pittsburgh. Commenting on the global economic crisis and developments in the Turkish financial system, Erdogan said that the harmonization of international accounting standards on financial tools and the implementation of these standards by all countries of the world are critical for preventing another financial crisis. Erdogan also said more power should be given to global auditing institutions. Along these lines he praised the Financial Stability Board and called on G-20 members to join, saying it would provide further cooperation among countries. "A simple but critical lesson we can draw from the global crisis is that the framework of regulation and supervision should be strengthened instead of increasing financial protectionism," he said. "Turkey has taken major steps in its financial sector in terms of reforms. It saw the advantage of these steps during the crisis." Erdogan said that open foreign exchange positions, after rocking the Turkish banking sector in 2001, had been put under control and now no longer cause problems. "Strict controls were taken in Turkey regarding the foreign exchange borrowing of people who do not have an income in foreign currency," he said. "Our latest regulations strengthened such controls. Thanks to our far-sighted approach on this issue, the Turkish banking sector stood apart from other countries during the crisis." Stating that he believes that despite recovery signs the world still faces some serious economic risks, Erdogan said, "Bank balance sheets have not become robust yet, which still blocks loan channels." Erdogan stressed the importance of boosting domestic demand and growth in Europe for a robust, balanced global growth. He said medium- and long-term initiatives to combat unemployment are needed and that Turkey wants to gradually reduce the ratio of its budget deficit to the national income, and keep it at 3 percent next year. The public debt stock will start to fall in 2012, Erdogan said. He said there are many structural measures in Turkey's recently announced medium-term economic program that will make financial balance reforms more permanent. Erdogan also listed measures in the program such as continuing privatization bids, strengthening labor training programs, and a project to make Istanbul a regional and global finance center. Erdogan said he believed cooperation between G-20 countries should be boosted for a more sustainable and balanced global growth.