A brief history of the Bank of Albania

The History of the Bank of Albania and its credit and monetary system in Albania is the history of the attempts preceding the foundation of the National Bank of Albania (1925-1944), the transformation to the State Bank of Albania (1944-1992), to be concluded in 1992 with the Bank of Albania, which enjoys with the attributes of a modern central bank.

Albania had its first central bank institution in 1913. It was founded under the agreement concluded between Ismail Qemali Government with Mr. Karol Pitner and Mr. Oskar Pollak, representatives of Wienner Bank Verein, acting on behalf of the Austrian-Hungarian bank-group and Mr. Pietro Fenolio and Mr. Guido Ansbaher, representatives of the Banca Commerciale Italiana, acting on behalf of the Italian banking group. This institution did not live long due to the political climate of the era and to the outbreak the First World War.

It recommenced its activity in 1925 under the name National Bank of Albania, with the administrative centre located in Durrësi and Administrative Committee placed in Roma. The re-establishment of the Bank became a reality due to the concluded agreement between Mr. Mufid Libohova acting on behalf of the Albanian Government with Mr. Mario Albertit operating on behalf of the Italian financial group.

The circulation of the first Albanian currency unit took place in February 1926. The gold franc was set out as the official monetary unit. Our currency had its subdivisions (Lek, cents, 1 gold franc equated to 5 Lek and 100 cents) and its manifolds (5, 20 and 100 gold francs).

The National Bank of Albania, throughout this period, implemented the gold standard implying that banknotes are converted into gold and into strong foreign currencies, as dollar, lira, pound, etc. This bank, in addition to the issue function, carried out crediting functions as well. Over a 10 –year period it acted under monopoly conditions in this field, while since 1938 found itself in competition with the Bank of Napoli and the National Bank of Labour.

In 1945, the Leadership of the Antifascist National-Liberation Council approved the Law on the cancellation of the National Bank of Albania’s concession and of its shares, which opened the way to the nationalization of the Bank. The organic Law of the State Bank of Albania was approved on January 3, 1945, giving to the bank the attributions of a central bank and simultaneously those of a commercial one. After the Second World War until the year 1990, the State Bank of Albania supported the program for the development of the socialist economy having as characteristic the extremist centralisation of this system into the state’s hands.

At the end of 1990, the transition of the political system in Albania reflected vital changes, leading the economy to enter into a transforming stage from a state-owned economy in a free market one. This changeover gave life to the two-tier banking system in Albania. Thus, on April 22, 1992, the Bank of Albania was established by the approval of the Law No. 7559, “On the Bank of Albania”, which was reviewed latter in accordance with the models taken from the western countries and the recommendations provided from the international organisations.

The Bank of Albania is the central bank of Albania. The economical- political and social developments since the establishment and so far, have enriched the functions carried out by the Bank of Albania (they have augmented and enlarged the functions of the Bank of Albania).

Article 161 of the Constitute of Albania ratifies the status of the Bank of Albania and the Law. 8269, dated 27.12.1997 "On the Bank of Albania" sets out, the objectives, tasks and relationships with the banking system, organisation and management, ownership on the capital, financial statements and profit allocation.

The Bank of Albania is a fully state owned-bank and is accountable to the People’s Assembly of the Republic of Albania. The Bank of Albania is managed by the Supervisory Council, composed of 9 members, appointed by the People’s Assembly of the Republic of Albania for a term of seven years, eligible for reappointment.

The Supervisory Council is headed by the Governor, who serves as General Executive Director as well, in charge of the day-to-day business of the Bank of Albania. Mr. Ardian Fullani is the current Governor of the Bank of Albania appointed by Decision No. 152 of the People’s Assembly dated October 28, 2004.

The Bank of Albania, within the competences defined by the Law, is independent of any other power for the accomplishment of its main objective and in exercising the tasks assigned. Every subject is obliged to respect the independence of the Bank of Albania, to not try to have influence on any member of the Supervisory Council for impinging on its obligations to the Bank of Albania, and to not interfere in the activity carried out by the Bank of Albania.

The Bank of Albania, with the attribute of the monetary and supervisor authority of the country, enjoys the following functions:

• It compiles, approves and implements the monetary policy of the country, and employs the appropriate monetary instruments to achieve the monetary policy targets;
• It has the exclusive right to issue and circulate the national banknote and currency;
• It keeps and manages the foreign reserve of the Republic of Albania;
• It compiles, adopts and implements the foreign exchange regime and the exchange rate policy;
• It licenses or revokes a license on exercising banking activity and supervises the banking activity to ensure the banking system stability;
• It acts as banker, advisor to, and as fiscal agent, of the government of the Republic of Albania;
• It serves as Bank of banks;
• It prompts the normal functioning of payment systems.

The Head Office of the Bank of Albania is located in Tirana. It has 5 branches in the districts of Shkodra, Elbasani, Gjirokastra, Korça, and Lushnja.