 So, good afternoon everybody, my name is Fatima Dawi and I'll be moderating this session. We will be discussing the financial infrastructure versus economic growth and we're specifically targeting three areas in the world, Euro Asia, the Middle East and also Europe. Joining me from the right is Mr. Ibrahim Turhan and he's the Chairman and Chief Executive Officer of Bursa, Istanbul, Turkey. We have Mr. Samir Sharifov, Minister of Finance, Azerbaijan and then to his right we have Mehmet Shimsek, the Minister of Finance, Turkey. We have Hans Paul Bergner, who's the Chairman of the Boston Consulting Group, Germany. And last but not least, Mr. Khaled Abdullah Al-Janahi, who's the Honorary Chairman of Vision 3 United Arab Emirates. Okay, I'm going to start by hearing from each panelist in this session his view on the current situation. When we're discussing the financial infrastructure of these regions, where are we at the moment? I'll start with you, Mr. Hans. Thank you very much. Can you hear me? Good. I think if we look at the financial infrastructure around the world, we see especially the institutions in the emerging markets and also in Turkey in pretty good shape because they have gone through their crisis 10, 15 years ago and have done the cleanup. The American institutions I think have done a pretty good job in cleaning up. The European institutions are really still suffering and as you know there is a big stress test ongoing in Europe which will claim some casualties obviously among the institutions. Overall what we'll see is a clear need for increasing capital. So the capital requirements have increased, regulations have increased significantly and which will continue to increase going forward. And overall so I think the cost structures of banks have changed significantly. We'll see lower profits and we'll see the need for banks in general to really change their business model to become more efficient. Still that I would say and we at BCG would say that will not mean that banks and institutions in general financial markets cannot provide the necessary credit, the necessary liquidity for the markets. And what I think we'll clearly see except with maybe minor issues in Southern Europe, those companies who need money, who need credit are getting it. There is enormous funds in the markets. What we need in order to achieve growth are structural reforms everywhere in the world from the US over to Europe, India, China, Japan but also many other emerging markets. And as long as we don't get those structural reforms we will not get the growth that is important. And by the way I think as a special issue in Europe and Japan we have a massive demographic issue which will limit growth anyway to a relatively low single digit number. So I think the financial structure is in pretty good shape with significant changes needed in the business model going forward. Weren't we seeing economic growth into certain numbers? Weren't we seeing that affecting economic growth in a positive way? What are we missing? I don't think we are missing funds. We're not missing credit. We're not missing liquidity. I think what we are missing is really addressing the fundamental issues in the various economies and the ECBs or the Bank of Japan's and the FEDs will not be able to solve those. Mehmet, you overlooked the fiscal framework in Turkey. How is the Turkish situation? Where are you right now? Well, we are in good shape. Growth is more modest but it's more sustainable. We have relatively large current account deficit but it's narrowing. We have a bit of pickup in inflation but it's on the back of some temporary factors such as food prices that is driven by geopolitics. I mean, I know I probably need to clarify that. The fallout between the West and Russia means more demand for Turkish agriculture output, refugees means more demand but also all these geopolitical developments. So we have a bit of inflation problem but monetary policy stance has been tight, remains tight and in that sense hopefully expectations will be contained and we'll move back to lower inflation as we go forward. Our fiscal position is extremely strong. We have one of the best in terms of deficit and debt ratios. Our fiscal deficit is half of emerging market average, a quarter of OECD average and debt to GDP ratio is roughly about a third of EU average and a fourth of OECD average. So we're actually in reasonably good shape but the environment of low interest rates and low volatility is probably largely behind us even though there isn't a global synchronized monetary tightening which is the good news but still I think we'll probably have more volatility as we move forward. I'm speaking for an average emerging market and of course that applies equally to Turkey. So the way forward and I agree with my friend there is that we need to do more reforms and I think that's exactly what Turkey intends to do. We have had a significant political economic transformation over the last decade. What kind of reforms are you looking at at the moment? Well, we no longer talking about like, you know, big macro type reforms. It's more about micro level, industry level to create level playing field to enhance competition, to increase savings, to reduce our dependency on energy. So there are many issues. We've actually identified 25 chapters for entire Turkish economy to be transformed. So we're talking about second, third generation reforms that would help actually put Turkey back on a higher growth trajectory. So I'm actually very optimistic we've identified 1200 micro level measures that if implemented Turkey could easily go back to another decade of five to six percent real GDP growth rate which means strong convergence with EU and of course with developed markets. We're not going to go through the 1200 ones but good to know Khaled since you're probably the only person who knows more about the our region, Mina, the Gulf, I think we should separate Middle East from the GCC. If we're talking GCC, we haven't seen the same dynamism going back after the crisis in terms of the financial infrastructure, probably no better. How is the situation right now and what's lacking? Where is the problem? Are we talking about subsidies that are stopping the finance market doing its job? What's going on? I think subsidies, I mean it's throughout whether it's GCC or the rest of the Arab world, I think it's a hundred towards actually real growth, real economic growth in that part of the world but you have a few problems with regards to the financial infrastructure. I mean the banking and especially the Gulf, the banks are the ones who are playing the game. They have all the cash with them. When you look at the spread between basically what they pay and what they get is substantial. So they are controlling the way the infrastructure in terms of the financial or growth of capital market development and actually enhancing somebody's wealth is becoming a problematic. We might have a growth of 6% or 7% or 5% or 4% but in reality how much of that's coming down to the man in the street and we've seen in the Gulf, as we've seen in the rest of the Arab world, where the gap between the rich and the poor has been basically growing up whilst there's been economic growth but it's been growing unlike somewhere like Turkey where in the past basically 14 years or 12 years we've seen that and it's been a great example where they've diminished something basically they've created a real vibrant middle class and I feel sorry for Mehmed because he's looking into 2015 and looking to the future, how they go about that, it's not easy since he's been so successful of creating that to maintain that. In the Gulf I think we are missing the point of creating that vibrant middle class and I think part of it is because the governments are in charge. They have 70 to 80% of the economies in their hand and I think the financial crisis has helped certain countries to go back to the old ways which means the governments, they become basically the owner of the economy rather than creating privatization allowing the basically private sector to come in and to benefit out of that. So we do not see a true entrepreneurship for different other reasons infrastructure not just infrastructure from a financial infrastructure but really from infrastructure of education, critical thinking, allowing people to think outside the box. We close that because once you open that up it has a lot of other issues you take away powers from elsewhere. So I think that is an issue but what I see the rest of the Arab world, I mean Egypt, we should never forget, Egypt is the biggest country in the Arab world. Egypt absorbs a lot. They have a gap basically around $35 billion which $28 billion in terms of subsidy is only for the mahrugat for the energy side of things where it just doesn't make sense. 62% of that $28 billion is for the top 1 million people and then they are 38% which goes to the other 99 million people which does not make sense. So there is what we have been just hearing about true bottom line infrastructural issues problem. We can have growth but if that growth is not coming through to the people you can have a major problem in longer term. Do you see that improving? What's missing? What should we do? We are clearly behind in terms of financial infrastructure when we compare ourselves with other regions. I mean simply emerging markets we are a little bit far off. Do I see positivity? I think there is only one way to look that we have to be positive of the future. Unfortunately today you are in a position where the banks, because the banks they only because true financial infrastructure when you open up the market, when you have capital markets, when you have other ways of basically creating wealth, creating capital. What's happening in that part of the world, the banks are in control. The governments are in control of those banks and so everybody is living that life because they are in control. But they have to open up sooner or later. When they are going to open up? I don't know. I mean Saudi has been a good example in terms of allowing foreign investors to come to the capital market. That's a positive thing. But then you have a lot of other issues. You have issues, I mean the gentleman on my left would know better than me on this thing and to do with legality, with leaguer, redress and all those issues in terms of people coming from outside and investing. How do you cover that? So those are elements that needs to be addressed. Samir, how is the situation in Azerbaijan? Azerbaijan's situation is, we assume it's quite as a positive situation because the economy of Azerbaijan during the last 10 years tripled and Azerbaijan was one of the fastest growing economies in the world. Of course, it was driven largely by the accelerated development in the oil and gas sector and on the back of the growing oil-related inflows into the economy. So the government's development agenda right now is to transform this oil revenues into non-oil sector development. And I have to say in this regard that the last three years were quite positive in this context because we have recorded almost 8% GDP growth rate in so-called non-oil sector of the economy. So of course, it's not easy to transform from the oil-based economy to non-oil based but this is the development agenda of the government. We view financial markets and market infrastructure development as a very important driver of our future growth. Azerbaijan, let's say unlike, let's say our neighbouring country, Turkey, is the economy with quite high level of savings. So our fiscal deficits are basically close to zero. But are they used? Excuse me? The savings. The savings are used, yes. But we have a kind of optimum level of expenditures and savings. So to this end, we have established a sovereign wealth fund, which is called the State of the Fund of Azerbaijan, and this is quite a common feature for many oil-producing countries in particular, so in the Gulf and many regions. So from this point of view, we are also accumulating oil windfalls into the fund, but at the same time, so we also every year we allocate certain amount of hard currency to inject into the national economy. And we believe that this is a very important driver of economic growth in Azerbaijan and we shall be continuing to do it. However, so the approach of the government is gradually to reduce these injections from the fund at the same time and maintain the macroeconomic stability in the country. This all sounds good, but surely there's something worrying you. What are you working on right now? What are the things that you want to improve within the financial infrastructure of Azerbaijan? What is it? We believe our stock market and equity market infrastructure should be definitely improved. We believe that they are still on the face of early development. Of course, the Azeri market is not that big. And basically talking about the region, I have to state that while the advanced economies, they continue to expand their balance sheets and the interest rate environment is quite depressive in these countries. So the emerging markets, they offer very interesting opportunities with much higher interest rates. And so therefore I believe that it creates an important also opportunity to attract so investments in order to develop the financial market. In the case of Azerbaijan, we believe that the best way for us to proceed is to promote better cooperation with other regional economies, with other regional markets with much well-advanced infrastructures. For example, the stock exchange of Azerbaijan has been cooperating very closely with Istanbul stock exchange. They have special cooperation agreements. We know that some regional capitals, they already aspire to become new regional financial centers. So as an example, I can call Russia, Kazakhstan, they have already made such statements. We are, let's say, quite humble in this direction. So we believe that we have to develop the markets through closer interaction with our regional neighbors. We have to, and I think there are some ways to do so. One of the major, the most important ways is first of all to try to align the regulatory framework because it differs depending on the country. The second, of course, is to provide a better exchange of information between these financial market regulators. I think it will allow both the countries and also the market players to get more, let's say, information on how to act in a specific country. And thirdly, I believe the trading platforms and all these, let's say, if you wish, the sophisticated infrastructure of the markets, the technical infrastructure of the markets, they could be aligned as well. So there is a need for a kind of synchronization between the markets to the extent it's possible. Okay. Ibrahim, I mean, if we talk interest rates, everybody is talking about the interest rates and everybody is watching the Fed. When is he going to decide to raise interest rates and then hence going back to a rate normalization? Do you think Turkey is ready? I'm asking you this question because I can see from your bio that you wear another hat and you're involved within the central bank. Is Turkey ready? Of course. We aren't. Very short answer. But you know, there is an unwritten law of the central banking. We never comment on currency and we never comment on interest rates. Okay. So we're not hearing any answers today. Not today. Especially, you know, taking into consideration that now I am hearing another hat. Okay. Mehmet, will you have the same answer or would you be able to tell us what you think? Well, Fed tightening is going to be negative for emerging markets, in particularly in terms of capital inflows. No question about it. But as I highlighted earlier, unlike 1990s, when you had almost synchronized global monetary tightening and when emerging markets were starved to capital, I doubt that that would happen this time around. More importantly, I think fundamentals have improved in emerging markets. That doesn't mean we're not going to continue with sluggish growth. I think emerging markets are going to have a decade of relatively low growth for various reasons. Like commodity prices are not going to rise as fast as they have been, for example. That's one key. It's going to be a key drag on a typical emerging market growth. And there are structural issues. But as far as Turkey is concerned, while the fact that we have a relatively large but narrow incarnate account deficit, you know, makes us vulnerable to Fed rate hikes, I think fundamentals otherwise are in pretty good shape. That's why we're maintaining a very strong fiscal position to allow for some fiscal room to respond if needed. Secondly, the banking sector is actually in very good shape. It's very healthy, well-capped lies, solid asset quality. That's important. Our household leverage is relatively low when you compare with emerging Europe or Europe in general. So while we have some vulnerabilities, we actually have quite a few strengths as well. So that doesn't mean that we're going to be immune to, let's say, if there is some turbulence, but we're going to be fairly resilient. And I think that's really matter. And that's why I think the best preparation is to do more reforms. So you are prepared. Are you looking forward to it? Well, we would like this eventual normalization to happen as soon as possible because, having said that, the fact that ECB is faced with sluggish growth, or almost growth are actually stalled, and a deflation risk, and that ECB is actually now on an easing sort of spree, that's actually good news for Turkey because we have stronger linkages with Europe because Europe accounts for over 40% of our exports, 75% of FDI inflows to Turkey. So the health of European Union, I mean, the health of European economies matters more to us on a more fundamental basis. I think we have Hans Paul who takes a neutral position so he can tell us because we are talking about different positions. Paul, Japan is doing something, Europe is fighting the weak numbers, and US is a different story. So tell me. So we'll see low growth in Europe and Japan. That's why we also will see low interest rates for a long time in both Europe and Japan. So even if the Fed increases and they will increase, and it's good that they do this in order to normalize interest rates, I think there will still be significant excess liquidity in the markets coming from Europe, coming from Japan, and therefore I think there should not be starvation in any of the emerging markets, certainly also not in Turkey. I think the key is there, I do disagree actually with you, Mehmet, on the sluggish growth rates in the emerging markets. I think it's really important to overcome this, just depend on cheap money and commodity prices and really build strong economies, and I think what we're seeing this in Southeast Asia, we're also seeing this in India and hopefully new Prime Minister Modi will make significant changes so that India can come back to a growth rate of 7 or even 8 percent, and we should also see good growth rates in Southeast Asia, in Africa, Latin America, because at the moment they are quite low, I think they can come back. So I think the next 10 years could actually be better than the last couple of years that we've seen in the emerging markets. That will also bring a new momentum to the world economy, even though the increase of interest rates in the Fed is coming, and it's important in order to get back to normality. Samir, just to know where Azerbaijan is. So we should be quite interested, because basically most of our savings there are in US dollars, so therefore we believe that the increase in the interest rate, or I would say normalization of the interest rate environment in the United States, will have a positive impact on us. On the other hand, so I also would like to echo the views of the previous speakers that so the interest rate environment in Europe will continue to be at quite low levels, and if you wish, Azerbaijan is long US dollars, but on the other hand, we have quite a substantial exposure to European imports. So therefore we believe that overall the situation is sort of on a macro level is positive for us. I would like also to use this opportunity to touch another important issue, and which Mr. Shemsek basically touched upon. So this is the issue of the outflows from emerging markets, so it is absolutely clear that increased interest rates in the United States, they will probably also may impact negatively the emerging economies, so there could be outflows. Another negative factor we have to take into consideration is geopolitical tensions in the region. I think in some cases they may have much bigger impact on our economies than sort of the, let's say, Fed actions, if you wish. So therefore I think we have to be better prepared to, let's say, tackling potential implications of these geopolitical tensions, because let's say if we take the Ukrainian crisis, for example, and nobody could, I mean, I don't believe here or in any other audience sometime ago could have, let's say, forecast that there could be such a tense situation in Ukraine, and of course it may have a very substantial, and it already has a very substantial implication, not directly but indirectly, let's say, if Russia, which is a major economy of this part of the world, so has a very substantial impact on central Asian economies, on Caucasian economies, and also on the economy of Turkey, because Turkey has very vast, let's say, economic relations with Russia, so therefore we have to be ready to these implications, the negative impact on our markets from geopolitical tensions in the region. Okay. Khaled, let's talk about, I mean, if we, the latest number I have on global debt markets about $100 trillion, if we talk about Islamic finance, we're talking about half a billion Muslim around the world, about a trillion dollar turnover, but why aren't we seeing, do you think that this model of Islamic financing is sustainable? Can we actually use it to be part of the infrastructure, whether in the region, MENA, or other regions, and to be, hence, a major contributor to economic growth? I'm glad with your numbers, because half a billion Muslim, maybe you're trying to have a practicing Muslim, but I think we're around 1.5 billion Muslims. Okay. Just an average number, I don't want to be too... In this one. I think Islamic finance, I'm taking away the word banking. Islamic finance today is around $2 trillion in terms of assets, of which 1.6 is basically to do with banking and insurance, maybe around $100 billion on that. And there's around $400 billion in Sukuk, which is basically Islamic bonds, which has come through. Now, Islamic finance is just another product which is in the market from a financial structure in terms of raising money. But the way the growth has come to this model, in that in the past five years, you look at it, it's been growing at just below 20% per year, specifically in the Sukuk side, because it's been seen to be the good thing. I mean, after the financial crisis, suddenly it became clear that speculation is a major, major problem. And actually, even certain countries in Europe, France being one, and I think Lagarde, when she was at that time, the finance, they were looking at an alternative. And Islamic finance was a very good alternative, specifically from a Sukuk perspective, that you avoid basically the element of speculation and its asset-backed commodity. So what happens is that this is one form of raising money. But my problem, actually, is the question that you raised earlier on, and especially in the GCC and the other countries in the Arab world, that with interest rate hikes, the GCC countries, the same as the other Bidjan, with a small difference that they are picked to the dollar. So as a government, their income would increase. The deposit base will get better. But the problem is that to create what we call a real economy, which is the middle class and having a vibrant economy, it's going to be much more difficult. So SMEs will be more expensive for them to raise money. The basic institutions, firms, industrial companies will have much difficulty in raising money, because it's going to be much more expensive. And GCC countries, of course, they're going to have a major problem in their hand. They're already in debt, a lot of them, which means it's going to be much more expensive for anything in you about the future. That means more expense. So that is a challenge that they need to handle. But I would like to bring up this thing. I mean, we always talk about raising money in terms of capital, improving the growth in each of these countries. I think one important thing we should not forget is the environment that we work in. And the environment here, I mean, the regulation, the legal system. Okay, the intermediaries, the intermediaries, such as the regulators, such as, I mean, the president yesterday spoke and I'm not going to talk about it. The credit rating, okay, basically entities. I mean, these entities which just basically say and put the rates with the different kinds, I'm not going to talk about that. But the major one, which I do talk about, is the standard sitting intermediaries, such as accounting standard sitting and auditing standard sitting. Post-Enron has been a major problem even for an auditor. An auditor in the past used to use judgment at the end of the day to deal with things. Today, it takes the boxes. It does not just use judgment at the end of the day. So boxing, taking the box is the most important thing. And what's happened that marked to market from a standard perspective in 2008 was one of the major issues. If we had marked to market 10 years earlier, we would have faced the problem of the financial crisis much earlier. We would have dealt with it much earlier. So standard sitting things is going to create a problem. Now, let us talk about basically even when you want to acquire a company in terms of valuation and if you want to have a subsidiary, a valuation perspective, you cannot have much more than 15 or 20%. I don't know what's going to be the mark in terms of a premium for having it as a subsidiary. All that actually avoids development in terms of a structure. And these are important things that we should not just look at it from a governmental perspective, what's happening around you, but the intermediaries do create an issue either positive or negative. And what we've seen in the past few years has been negative. And I'm against regulators because today regulators have taken over. I mean, this is where exactly regulations is a big topic is a hot topic. Now, Brahim, do you think that the regulation is a major hurdle to see the finance market doing its job, a normal thing, lending money, making money available and hence encouraging economic growth? Where does regulation should stop? Well, of course, there is a significant change in regulation and regulators' positioning. I remember the days when I first participated in G20 exercise. During those days, when we were drafting the communiques, the regulation, as a word, was appearing only once and in the form of deregulation. And when we had 2007-2008 crisis, we started to add annexes on regulation to the G20 communiques. So, of course, the playing field has changed. And we have to accept it. But the thing is that, you know, if you look, as of today, the situation in the world, and actually it is closely related with the first topic, financial infrastructure. For example, in advanced economies, the regulation on the one hand wants to bring competition, especially when it comes to the capital markets. So they want capital markets, institutions, exchanges, clearing houses, settlement bodies, even custodian service providers to be competitive. But in order to do that, they push too far in such a way that they have become kind of obsessive in this regard. And as a result, the liquidity has fragmented extremely and we ended up with less price discovery and less efficiency in all markets. When it comes to the emerging markets, of course, this time, regulators' perspective is quite different, because as mentioned earlier, we weren't impacted as emerging markets deeply out of the recent crisis. So the most important thing for the regulators is to keep this status. So they are very reluctant to let markets to develop and bring innovation. And which is worse is that in the name of converging or integrating globally, for example, in Turkey, of course, and we are in addition an accession country to the European Union, we want to be compliant with all European regulation, MIFI, Esma regulation, Emir, et cetera. But the needs of those regulations for the advanced economies and the needs of the emerging market economies are quite different and they don't match necessarily. So this is a problem. But if you let, on the other hand, to specialize in terms of your regulatory environment, then you'll end up with having less international liquidity because simply in financial institutions and advanced economies, they don't want to get messed up with another regulatory environment, so they don't want to face with the regulatory arbitrage. What's the solution? Well, the solution is not an easy one, but let me try. First of all, regional integration is more important, I think, in this regard. And maybe to add what Mr. Minister has already mentioned. We, as Borsa Istanbul, we are a shareholder of Baku Stock Exchange and we are a shareholder of Kyrgyz Stock Exchange. We are a shareholder of Montenegro Stock Exchange. We are a shareholder in Sarajevo Stock Exchange. So what we have in our modern, actually, two years ago, taking the occasion of EBRD annual meeting here, we signed an MOU with EBRD. And the aim is to increase the technical capacity of the local exchanges in such a way that at the end of the day, we will be able to create kind of network of exchanges regionally. This may be a solution because if you can create like a small mimic, a small replication of European Union, you don't have necessarily to be in 100% compliance with the international regulators, at least not necessarily simultaneously. You may have a lack, but on the other hand, you may have a well-integrated regionally environment where your investors and your companies can benefit out of it. And we are looking to do the same with the Middle East, of course. We have extremely good relations with all exchanges in the Middle East and we are looking for developing it further. We have about 20 minutes left, so I think I would like to get some questions from the audience. Before we open the floor, I would like to know what kind of audience do we have here? How many bankers do we have in the room? One, two, three of them? Okay, not bad. Okay, government employees, private sector. Oh, lots of private sector, these guys who need money. Okay, we're happy to open the floor now, and please just give a brief description of yourself, your name and your title, and then you can ask the questions to one of the dear panelists. Any questions? Here we go. My name is Nick Gajar, I'm from the Orlayan Group in Saudi Arabia. I have a question for Mr. Rahim about rising interest rate in the U.S., just kidding. But the actual question is we've been talking about structural reform since the decades, and every time we have a crisis, we open the file of structural reform. Why do you guys think from a leadership point of view, we're always reactive to financial crisis as opposed to being proactive when it comes to structural reforms? And I'm not talking about any specific country in general. Okay, Hans Paul? Yeah. I think when we talked about reforms in the 60s and 70s, it was more money for the people, more money for industries, reform meant more money. When we talk about reform now, we talk about taking away money, we talk about taking away protection, subsidies, whatever, wanting to open up markets, opening up labor markets and so forth. And people don't like things to be taken away, even if initially they didn't expect these things to have, now that they have them, they want to keep them. And that's why there's resistance to reforms because reforms mean less protection, less money and so forth. And every government who has tried this is in one way or the other being punished. And we've seen it in Europe, we've seen in many other places where governments have been voted out of office because they have started really reforms. Some have done a pretty good job. Now we see in Germany, for example, that the Agenda 2010 actually has brought good benefits, but the main party who has brought these, the Social Democrats, have been massively punished by the electorate and being reduced to by 10, even 15 percentage points, which is, of course, a landslide. So I think reform is easy to talk about. I think intellectual circles, it's a wonderful subject, academics, but for politicians it's really tough to execute. And I think it's not a lack of leadership. I think many people do understand this, but I mean, if you want to commit suicide, go for massive reforms. Mohamed, I think you want to add to Haskell's answer. No, I agree that reforms are not popular, most of them anyway, but there's one other aspect. Reforms are also costly sometimes. For example, we decided that we need to raise Turkey's savings because we have low savings, which is translated into relative large current account deficits. So we've decided to give a very generous, I mean to make a very generous offer to Turkish citizens. If you save 100 lira and agree not to touch it until you retire, we'll give you 25 lira. So 25% return is a massive undertaking. And that means we have to put billions of lira in the budget to actually top up these pensions, private pensions. It's good to do, but it costs money. I mean, this is just one example of relatively costly reforms. So, but we don't really have to wait until the next crisis. I mean, we shouldn't waste any crisis. We should definitely use that as an opportunity to reform. But at the same time, I definitely think that we should reform times when things are normal. And that's exactly what my government is doing. We are working on a very comprehensive reform program and we're going to be pushing very aggressively second, third generation reforms that will help Turkey move up the value chain, improve quality of education. And so I'm actually quite positive on near-term outlook for reforms. Okay. If I may, I'd like to give the example of Turkey but from my angle. For example, for the last two years, we have been passing through a tremendous restructuring program in terms of the capital markets. We brought together three separate exchanges. We transformed it into a joint stock company. We accomplished vertical and horizontal integration of the markets, strategic partnerships, regional expansion, so on and so forth. And there was no crisis at all. So it requires, as you very rightly described, a visionary leadership. When you have this, you can do it. Any more questions? Faisal. Thank you Fatima. I would like to address Mr. Janahi and talk a bit about the Middle East. Perhaps what we can say about our region is that the only constant is change. And the last few years have been extraordinary and obviously it has had its impact on the infrastructure, on growth opportunities. There doesn't seem to be a way as far as, you know, anybody is concerned that we can secure that the infrastructure keeps on progressing, that the growth keeps on given all the changes that has been happening. So I just wanted to know what is your insight if you were to give a recipe for safeguarding the growth future of our region given that we all know that unfortunately there is nothing we can do about the kind of change or the political atmosphere that we have? Well, you gotta guarantee me if I do answer that question, I'll be allowed to go to the Middle East. But that's an answer. Okay, now, I think the, I mean, we talk, before I talk about that, the question that you raised, I think it's important to come back to that. We talk about financial crisis, we talk about the next crisis coming. We tend to forget the reality of the world. We can talk about things, we can talk about academics, putting things forward, economists looking into the future, all that we can talk about. But the problems come at you from a different perspective. Never so few have damaged the world so much. And that was 2008. Few banks in the United States and few banks in the UK and maybe some one or two in France, they basically created the damage that we are in, the financial crisis followed by the economic crisis that we've had in different places and we're paying big, big prices over that. Guess what, except for one company, which is Lehman Brothers, all the other big boys who played the game and made us to get us into where we are, they are still there, they've been supported. And guess what, talking from Middle East, a lot of the Gulf money now is sitting with those banks and supported to those banks. And we follow then suddenly after that crisis, we get all these new rules coming out across the world from a regulation perspective. And the first people to apply it are the smaller countries, the emerging markets, like the Middle Eastern countries. They do a go and apply it. The people responsible for applying, they don't know what the hell they are doing. They're just because to keep Uncle Sam happy, we will apply what you come up with. For arguments, just a simple question because this brings me to what you asked, is the corporate governance. Corporate governance is a big two words, but in reality, we don't understand what the corporate governance is all about. When you have a chairman, supposed to be an independent chairman of an institution and listed in a public company, Brahim can hit me back when I finish up with that, is that when we have a chairman who's supposed to be independent, corporate governance talk about independence. We don't understand what independence is all about. We have somebody who's a chairman of a board or a bank for 12 years, 16 years, he's the chairman, and he's supposed to be independent within the rules of corporate governance. So we don't know what we talk about when we bring these rules into that part of the world. So different countries have different requirements, the way to change. But to come back to your point, to create growth in that part of the world, Middle East. Now I look at this Middle East as a whole. I think the only way to do it is that a lot of excess money which is sitting part of that 17 trillion dollars in the United States have to be, be it 20 billion a year, be it 50 billion a year, be put into an EBRD, a specific EBRD for the Middle East sitting in Washington controlled by the Americans where they will take part of that money, which is the Gulf money, put it there, and they create and they spend an infrastructure when we need over 1.7 trillion dollars in the next 10, 15 years from Morocco to Bahrain to create jobs. Because what you need is to enable, Mr. Dahmer, we need something which is sustainable to create stability in that part of the world, to create growth. And to really coming back to what I started with Erion, to create a real, vibrant middle class. Turkey would not be what it is today if there was not a vibrant middle class. And those policies are very, very important. So we need to take some of that wealth, put it in the right place to create jobs, sustainable jobs where people will go forward and create real capital, real growth. It's good to say we have excess money, it's good to talk about growth, but that growth doesn't go to the main man in the street and really thinks that he can do something with it. We're gonna have a major problem. We're gonna have another, whatever it's called, the Rabih al Arabi, the Arab Spring, I call it Arab Awakening. I don't think there is a way back. We're gonna go forward. So it's better to understand and pay the price for reforms because reforms in our part of the world is different than reforms from an international perspective. There is reform, which is political, there is social reform, there is economic reform. We have to give people who are sitting in control of 10 pieces on the table today. King Abdullah said three years ago, it was, I think, and they'd see that we don't believe in revolution, we want evolution. We are all for that. We all want evolution, but evolution on paper and speeches doesn't do us anything. We need to see it happening. We need that milestones, we deal with it. And if we don't deal with it, as people who are leading, we should say, thank you very much, we should be out, somebody else should come in. That mentality, that mindset is the only way going forward. And I think that is what's happened in a place like Turkey. And that's why a lot of us are jealous of Turkey, but for our envious of Turkey, and we wanna be like Turkey. Brahim, do you wanna add, Khaled invited you to comment on his answer? Well, actually it reminds me, you know, the conference I participated in here in, again, Istanbul, and it was the Arab capital markets, and Mr. Minister was there as well. And I was talking about the corporate governance, and one of a sudden, you know, I enlightened from inside of me that actually corporate governance principles, we need to digest them exactly as you described, because when we say, for example, transparency, it means something. But when I look to our culture, our religious tradition, all Muslims believe that all you are doing are captured by angels, Kiram and Katibin. So you are basically, and by construction, transparent, and you cannot hide anything from God the Almighty. So the transparency is intrinsic in our culture, or when it comes to the accountability, if you believe the other world hereafter, then you have to be accountable because you will be accountable against what you have done here. Or when it comes to responsibility, all Muslims do believe that the, you know, the God first proposed this duty to mountains and the heavens. And they didn't accept it, but humankind did accept it. This is written in Quran. So this is part of our culture, intrinsic in our culture. We are responsible to the rest of the world. So if we can communicate this message like this, I think people will understand it easily. And since it is part of your daily life, then it will be much easier to them. So in order to be, I mean, there was a slogan by a bank, global. I think this is the secret recipe. We should be global. I think I agree only for the half a billion that Fatnum was talking about. But there are the other billion that's non-practice. I told you, I told you I took an average position. Hands full, I really want to hear it. Quite honestly, I think even with all due respect, I think that would mean we have only saints in this region. Everybody is going for transparency and everybody is fully accountable. I wish you were right, but I'm afraid we have the same challenges all over the world, irrespective of religion, of gender, of whatever background. And I think you're absolutely right. I think we need people to act responsible, but I think we also need to create the structures. And going back to the issue of change, we need to do the hard changes, even if it means leaders will lose their position. But I think it usually takes a crisis, not just for governments or countries, but also for companies usually to make the big change happen. Very few are enlightened enough to do it early before somebody forces them to do it. But as I said, I think one needs to be a bit careful in assuming that people by themselves will do it. You are the only saint on this podium, not because you're non-Muslim, because you're a German, you tell your American partners what they're doing. I want to ask you a question here in terms of regulation. I mean, you've heard everyone's comments and they all had a complaint that regulation should be adjusted to the culture, to the region, to what is your take on this? Where do regulation should stand and do we need to have a sort of comprehension or understanding of different region needs before we put regulation across the board? Well, I think we first, they have to see that the regulations are coming because there is enormous pressure on the politicians and the regulators to tighten the rules because massive fraud and greed has done enormous damage. And the pendulum is still swinging in the direction of more regulations. Yes, these also create some damage because it's very difficult, both for the regulators and the banks and the other institutions to really follow the regulations because these are hundreds, thousands of pages and thousands of people are being employed to deal with those regulations. But I think if the banks want pity, I think they will not get pity from anybody, neither from the corporates nor from the general public and certainly not from the politicians. I think we need to go back to simpler rules, tighter rules, but simpler rules. And I think one of the key issues and you can talk about this is clear to say we need significantly higher capital ratios and that will limit and not risk weighted but just one simple ratio that is easy to apply, easy to regulate actually and to control and that will also limit the exposure of these institutions. I think there's a lot of thinking around that because the thousands of regulations we have, whether it be global or regional, I think they will not do the trick because they're simply not controllable, not being followed up, neither by those who are supposed to be controlled nor by those who are supposed to do the controlling. Yeah, go ahead. Well, actually, you know, again, this is relative. And actually, to be honest, more relative than what I've just described because I remember, for example, from early days of my education, university education, when we were preached by our teachers that, for example, the banking regulation and supervision and monetary policy has to be completely separated from each other. And this was like the credo of the Washington consensus. And this was the assumption. And we were, again, taught that market regulation is the best because no other regulation can be as prompt and right accurate just than the market regulation, market self-discipline. But it happened to appear that this is not the case. And I think our conceptions, our beliefs, our acceptances can change over time and depending on what we observe. And there is nothing wrong in it because as John Maynard Keynes said once, if facts change, I change my mind. What do you do? Okay, we have five more minutes, but I think we have for Mehmet and then Khalid before we summarize. Go ahead, Mehmet. Well, the debate on regulations will continue, of course. We've seen markets destroy themselves and destroy obviously the real economy if it is not effectively regulated. It's not about more regulations, but effective regulation. And I have to admit that one size doesn't fit all. And general regulations sometimes have some deficiencies. Yesterday we had a good discussion, actually. We have these risk weightings. We have these capital requirements, which is the good news because I think a bank, if a big financial institution wants to take more risk, they should have to have additional capital, which is fine. That's well accepted, but you can't really put everything in one basket. Trade financing is a low risk. For example, project financing for infrastructure that has very clear cash flow. That's low risk. But to require banks to treat these low risk areas like a corporate bond, that wouldn't be fair. So we need to refine regulation. So I think that's really where we are right now. It's gonna be part of G20 agenda to look at some of these unintended sort of consequences of recent regulations. We'll see how much progress we can make, but definitely markets needs to be regulated. Markets are not efficient. Markets have immense ability to create loss of destruction. And we've seen that in 2008, 2009. I'll add very quickly, please. I think you said complain. I don't think anybody's complaining about regulation. To the contrary, people would accept regulation. People will be very happy with regulation. It's a question. And I think, yesterday, the President's speech, one thing I took on from his speech, which was very, very important, the issue of telling the truth hurts sometimes. What I'm gonna be saying is the truth. I want regulation, but the people who basically are in control of regulation should be whiter than white. They should be basically sent here than the same. What we have a problem in the Middle East globally, maybe we have exceptions globally in the Middle East, that the people in charge of these regulations, putting it there, I'm sorry to say, they are not up to the level that they should be. So that is the problem that you have. And that coming back to the main element of this session about how are we gonna have growth? How are we gonna create this financial infrastructure? I think one predicament to that infrastructure is the people basically in charge. And that's why, and we have a problem. I mean, you live in that part of the world. Guess, give me one person in charge of any, basically governmental position, can come and say, I resigned because I didn't do my job. None of them does do that. They have to be basically taken out. They have to be there until they are taken out. So that is the problem that you have. So it's not a complaint about regulation. It's not a complaint about the changes in the world which is affecting us all. I'm hoping that Mehmet in his G20 meeting here next year, he will do something good for the part of the world that we're talking about. The problem is the people who deal with things, they are not the right people. And the longer we carry on like that, the more problems we have in the region. So I take Khaled, this is your takeout. This is your main issue because you've repeated it a few times. So that's something that you would like to, you're worried about. Hans-Paul, if I ask you one thing that keeps you awake at night, hopefully not something emotional, I'm talking about the subjects we're talking about, what would it be? Well, I think the biggest issue that we have is a lot of skepticism and people creating scenarios of sluggish growth, lower growth. I think what we've seen over the last 10, 15, 20 years despite the crisis in 2008 and then earlier, the dot-com bubble is enormous momentum going forward. And I think we can and should be quite optimistic about future growth in the world, driven mainly by the emerging markets. There are six billion people, besides the one billion in the developed markets, six billion people in the emerging markets who really want to build a better future. And I think they're working hard to make this work. Yes, there are lots of obstacles, not, and we don't have the saints. I think we should not wait for the saints, but I think we'll make good progress. And so I'm very confident that we will get the good growth over the next 10, 15 years. And yes, it will be regionally somewhat different, but I think overall, we are on a good path. And I think there will be progress, even though of course, there will also be setbacks and weaknesses. Saints don't work in the banking and financial sector. They're somewhere else. Ahmed, the same answer, I mean, the same question. Sure. Well, we will face with a lot of challenges I wish I could be as optimistic as my friend here, but what, I mean, right nowadays, we are concerned about the human tragedy that is going on right across our border. So clearly it's not purely economics. We can deal with the economic fallout. But it's a burden. All these, it is a burden. But, you know, that's the last thing on our mind. We are worried about what's happening in the Middle East. All these suffering. I mean, clearly we have issues, there may be problems, but we need to address our problems through more democracy, more fundamental rights and freedoms, better institutions, better rule of law. This region, I mean, for me, the most precious thing for Mina, for Turkey would be more stable, more prosperous countries, neighbors. You can't choose the geography unlike individuals you can't move if you don't like the neighborhood. So we are here for the long run and we really need to look at different ways of resolving our problems. And I think that comes way before deepening capital markets that is absolutely essential for obviously growth and job creation. So that's really what is bugging me or bothering me nowadays. Hopefully we'll get some sort of normalcy or some sort of stabilization over the coming months. But in the long run, clearly we need to go to root cause and we need to address the problem there. How about Azerbaijan? I am quite optimistic about the future and world growth, but I would like also to echo the concerns of Mehmet Bey stating that tensions, political instability worldwide and in particular now region was made derail the overall, in my opinion, optimistic growth scenario. If we take the region of Caucasus, for example, where my country is located, so Azerbaijan, as I said, has demonstrated very significant growth rates so during the last 10 years. But I'm absolutely sure that we could have done more if the situation in Caucasus was stable enough, if there was no aggression of one country to another as the case of the neighboring Armenia against Azerbaijan, if there are no so-called frozen conflicts in this part of the world. So all these processes, they, of course, create very substantial problems for the future of the original economic growth. If we take so very successful examples of cooperation, you may take so example of Azerbaijan, Turkey, Georgia and so today and yesterday, President Erdogan also mentioned very successful cooperation in the field of energy, in the field of transportation between the regions. I think this is what should unite us and this is what should move our countries forward and this is what will be the driving force of this economic growth. So therefore, once again, so I'm quite optimistic, but of course there are political and geopolitical issues that we should also keep into account. Brahim, do you wanna add to Mehmet's concern? Yes, actually, you know, there is a very serious challenge and we have to be concerned about it because for the time being, three fourths of all global companies having their annual income about one billion dollar are located in advanced economies. But in 10 years time until 2025, we expect to add to this number 15,000. Out of that, 70% will be located in emerging markets. So by 2025, the number of corporations having about one billion dollar annual income will be 50% in advanced economies, 50% in emerging markets. But there will be a huge equity gap in emerging markets and it is estimated to be around 12 trillion US dollar. If we cannot bridge this gap, if we cannot fill this gap, we will have problem and not only emerging markets because the world global output depends more and more the performance of the emerging markets. So this is a concern and we should develop tools that overcome this challenge and this has to be market infrastructure. This has to be capital markets in emerging markets. I think with the Brahim's comment, we came where the session comes to an end now. We have quite interesting takeout. We heard their main concerns over the topic. I would like to rethink starting from my right, Ibrahim Turhan, Chairman and Chief Executive Officer of Borsa, Istanbul, Turkey. Sameer Sharifov, the Minister of Finance, Azerbaijan. Mehmet Shimsek, the Minister of Finance, Turkey. Hans Paul Bergner, Chairman of the Boston Consulting Group, Germany. And obviously Khalid Abdullah Janahi, Honorary Chairman of Vision 3 United Arab Emirates. Thank you very much for attending and hopefully you've had an interesting session here. Thank you. Thank you.