Annual Report 2008 - Chapter III. Monetar y and financial developments

Production date: 21.05.2009

Printed on: 21.05.2009

Author: BANK OF ALBANIA

 

 

Monetary indicators performance during 2008 highlighted stabilization of money supply growth rates in line with net domestic assets performance, which reflected the economic agents’ demand for money. Real M3 growth rates were falling during two last years, suggesting a better monitoring of inflationary pressures. This slowdown was conditioned even by the gradual tightening of monetary policy during this period, through key interest rate rise. During 2008 Bank of Albania’s monetary policy was neutral, helping further consolidate the slowdown of monetary expansion pace. From the sectoral viewpoint, the monetary developments during 2008 reflected a higher need for financing the private sector, a lower demand of the fiscal sector and a negative contribution of foreign currency component. Private sector lending continued to generate high monetary flows, dominating the increased stock of money even during 2008. In the meantime, expansion of foreign currency credit at higher paces than deposits led to reduction of foreign currency claims of banks on non-residents and in consequence, to a negative contribution of foreign currency component to money expansion.