A brief history of the Bank of Albania
The history of the Bank of Albania and the credit and monetary system in Albania is a history of attempts preceding the foundation of the National Bank of Albania (1925-1944), transformation to the State Bank of Albania (1944-1992), and establishment in 1992 of the Bank of Albania, which enjoys 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 Qemalis Government and Mr. Karol Pitner and Mr. Oskar Pollak, representatives of the Wienner Bank Verein, acting on behalf of the Austrian-Hungarian banking group, and Mr. Pietro Fenolio and Mr. Guido Ansbaher, representatives of the Banca Commerciale Italiana, acting on behalf of the Italian banking group. The banking institution was short-lived due to the political climate of the era and outbreak of the First World War.
It resumed its activity in 1925 under the name National Bank of Albania, with the administrative headquarters located in Durrės and the Administrative Committee sitting in Rome. The Bank was re-established thanks to the agreement concluded between Mr. Mufid Libohova, acting on behalf of the Albanian Government, and Mr. Mario Alberti, on behalf of an Italian financial group.
The first Albanian currency was put in circulation in February 1926. The gold franc was designated as the official monetary unit. The Albanian 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 were converted into gold and hard currencies, such as dollar, lira, and pound. In addition to the issue function, the Bank carried out crediting functions as well. Over a 10-year period, it acted under monopoly conditions, but in 1938 it found itself in competition with the Bank of Naples and the Italian 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 Albanias concession and of its shares, which paved the way for the nationalisation of the Bank. The organic Law of the State Bank of Albania was approved on 3 January 1945, giving the Bank the attributes of both a central and a commercial bank. During 1945-1990, the State Bank of Albania supported the development programme of the socialist economy characterised by extreme centralisation of this system.
At the end of 1990, the transition of the political system in Albania reflected vital changes, leading to the transformation of the Albanian economy from a state-owned into a free market economy. This changeover gave life to the two-tier banking system in Albania. On 22 April 1992, the Bank of Albania was established upon the approval of the Law No. 7559, On the Bank of Albania, which was revised later in accordance with western models and recommendations from international organisations.
The Bank of Albania is the central bank of the Republic of Albania. Its functions have significantly evolved since its establishment, in line with economic, political and social developments.
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, duties and relationships with the banking system and the state, organisation and management, ownership equity, financial statements and profit allocation.
The Bank of Albania is accountable to the Assembly of the Republic of Albania and its paid-up capital is owned exclusively by the State of Albania. The Bank of Albania is governed by the Supervisory Council, composed of 9 members, appointed by the Assembly of the Republic of Albania for a term of seven years, eligible for reappointment.
The Supervisory Council is chaired by the Governor, who also serves as the General Executive Director, in charge of the day-to-day business of the Bank of Albania.
Within the competences defined by the Law, the Bank of Albania is independent of any other power for accomplishing its main objective and exercising the assigned duties. Every entity shall respect the independence of the Bank of Albania, shall not try to have influence on any member of the Supervisory Council, and shall not interfere in the activities of the Bank of Albania.
The Bank of Albania, with the attribute of the monetary and supervisory authority, performs the following functions:
The Bank of Albania has its headquarters in Tirana. It also has five branches in the districts of Shkodra, Elbasani, Gjirokastra, Korēa, and Lushnja.