Turkey to Establish Financial Stability Committee for Cooperation Between Boards

Speaking at a conference in Istanbul, Deputy Prime Minister Ali Babacan said a “financial stability committee” to be established soon will enhance cooperation between key regulatory bodies.

Taking the stage at the Istanbul Conference of Economics and Finance, or ICEF-2011, event, Babacan noted that the Central Bank, the Banking Regulation and Supervision Agency, or BRSA, the Savings Deposit Insurance Fund and the Capital Markets Board are all “independent bodies.” The new institution will act as a committee in which these authorities will debate and make decisions, he added.

The top minister also recalled that in 2006, BRSA had taken a measure on mortgage loans that was similar to the measures being implemented today to cool down loan expansion. “At the time, some scorned us by saying that we could not possibly know better than the United States. Then, the crisis erupted,” Babacan said. “Today, there are some banks that wish to surpass the [limits regarding mortgage loans]. We have warned them. BRSA chief [Tevfik Bilgin warned] them by revoking their licenses.”

Reflecting on the so-called “too big to fail” problem in financial markets, Babacan said that before the Justice and Development Party government, “a few holdings dominated the market,” operating in 100-150 different areas. “Now the situation has changed and these companies have focused on three-four sectors,” he said.

“The era of those who say ‘My surname is X and I have natural protection, the government is behind me,’ is over,” Babacan said, adding that the Competition Board is working “to solve such problems.” The board should be more powerful, he also said. In the past, there were problems of cartels in the Turkish media, Babacan added.

“As you might have noticed, I am touching upon very dangerous subjects,” Babacan further said. “In other countries, politicians are not able to touch banks or the media like this. But we are a government that has won the confidence of the people who understand us when we speak openly like this.”

May 20, 2011
SOURCE: Hürriyet Daily News