European Union Macroeconomic Imbalance Procedure MIP and Turkey Assessment 1

2008 Global Financial Crisis and MIP Structuring Since the establishment of the European Monetary Union, the risks of the growth, inflation, and competition indicators of member states and the balance of payments are regularly monitored by the European Commission. [...] The impact of the global financial crisis in the region has shown that the macroeconomic monitoring and surveillance framework of the EU was not sufficient enough. [...] To determine the unusual development of each indicator in the scoreboard by the EU, the threshold values were determined by examining the statistics and distributions of member states for the past period. [...] The devaluation of the Turkish lira, which is another indicator of external imbalance and competitiveness - indicated by the change of the real effective exchange rate - has exceeded the threshold value set for EU countries during the entire period examined except for 2012 and 2014. [...] Although these values were below the level of risk defined for the EU, the foreign currency liabilities of the private sector increased from $176 billion to $303 billion and the foreign exchange deficit position from $88 billion to $180 billion during the evaluation period, significantly increasing the sector’s currency risk.6 The indicator of the change of financial sector total liabilities to th.