In recent decades, the Turkish economy has been marked by short spurts of growth followed by financial crises, then by stabilisation policies attempting to restore growth. Average growth rates have been on a downward trend, and year-toyear rates have become increasingly volatile. Furthermore, Turkey is now the only major emerging country which has failed to bring inflation firmly under control. This poor performance has reflected pervasive structural rigidities, weak public finances and low policy credibility, combined with a poorly supervised and weak banking sector suffering from both low capital adequacy and uncovered shortterm exchange rate positions...