Annual fifth Conference of bank of albania
''CENTRAL BANKING IN THE TIME OF INTEGRATION''

DURRËS, 24 - 25 MARCH 2005

This conference will attempt to raise a number of issues related to the monetary policies pursued and targeted by SEE countries, and in particular to those concerning Bank of Albania’s policy.

Opening address of Mr. Ardian Fullani, Governor of Bank of Albania.

Dear friends, honorable participants, dear ladies and gentleman,

It is my pleasure to have you as my guests in this important event for Bank of Albania. I believe this conference to be one of the highest points in our yearly activity and for this reason I feel good when I see in the hall many friends of mine, honorable professors, outstanding economists, government officials, bankers as well as representatives from the media.

 

We decided to call this conference, The Central Bank in the Time of Integration because of the vital importance this difficult process has for our country and a number of other countries represented in this activity. We have by now understood that without financial integration we may not have true integration. I understand that we need more revenues, more political stability, and more cultural and social integration but of course, the so called financial integration is important as well. In this context, I believe that the role of the institution that I head, the role of the banking system, and that of the financial sector in more general terms, is very important and the challenges to be faced in this direction are numerous.

Strengthening the financial stability of the country, increasing the efficency of monetary policy and other economic policies, increasing the flexibility of the financial market, increasing the national territory covered by the banking business and increasing financial intermediation are necessary conditions for the true integration of country with the developed part of the old continent.

I believe that what we need concerns the marketing of values and that of the truth on the Albanian reality. I hope this conference will be a modest contribution in this direction. I wish banks and finance to be the vanguard in the road towards integration.

I sincerely hope that the papers to be presented in this conference and the discussions of the participants will be a concrete step in this direction. For this reason, I believe that the contribution of all participants will be tangible.

Allow me to one more time wish successful proceedings.

Greeting speeches

• Greeting speech - Mr. Fatos Nano, Prime Minister.
• Greeting speech - Mr. Namik Dokle, Deputy Prime Minister.
• Greeting speech - Mr. Arben Malaj, Minister of Finance.
• Greeting speech - Mr. Mario I. Blejer, Director, Center for central banking studies, Bank of England

Conference programme

Conference publications (Availables only in Albanian)

• Understanding fiscal budget
• A panorama of European Union
• 35 questions and answers
• What does it mean to prevent money laundering?

Fotogallery

Presentations and discussions in the Conference

• The effectiveness of Monetary Policy in Albania and the need for further reforms. Michael Bolle & Thomas Meyer, Jean Monnet Centre of Excellence
• A robust approach to Monetary Policy: Monetary Policy for the EU’s "New Neighbours". David Mayes, Professor of Economics & Advisor to the Board, Bank of Finland & Karl Driessen , Senior Economist, Monetary and Financial Systems Department, IMF.
• Financial Markets Turst Growth. Ardian Fullani , Governor, Bank of Albania.
• Financial stability and growth: Some theoretical issues. Mario I. Blejer, Director, Center for Central Banking Studies, Bank of England
• Monetary policy in dollarized economies. Karl Driessen, Senior Economist, Monetary and Financial Systems Department, IMF.
• Central Bank autonomy without monetary policy. Luca Papi, Director General of Central Bank of Republic of San Marino.
• Is inflation too low in Albania? Macroeconomic foundations and socioeconomic development. Jan-Peter Olters, Resident Representative, IMF.
• Monetary policy effectiveness and Central Bank autonomy: Lessons from the Italian monetary policy regime change of the eighties. Salvatore Rossi, Head of Research Department, Banca d’Italia.
• A review of Albanian monetary targeting regime with insights into the future. Fatos Ibrahimi, First Deputy governor & Erjon Luçi, Head of Research Department, Bank of Albania.
• Monetary and Fiscal Policy in an different environment. Sulo Hadëri, Bank of Albania & Sybi Hida, Ministry of Finance.
• What about monetary transmission in Albania? Is the exchange rate pass-through (still) the main channel?Marga Peeters, IMF resident adviser, Bank of Albania.
• Kosovo Experience with euroization of its economy. Michel Svetchine, Managing Director, Banking and Payments Authority of Kosovo.
• Does one size fit all? On the Impact of Capital Regulations. Jón Daníelsson, London School of Economics & Ásgeir Jónsson, Kaupthing Bank.
• Restructuring of the Czech Banking Sector. Ludek Niedermayer, Vice Governor of Czech National Bank.
• Europe's Single Market for Financial Services: Views by the European Shadow Financial Regulatory Committee. Harald A. Benink, Professor at RSM Erasmus University.
• Albanian financial system and the role of banking system within it.. Sherif Bundo, Edlira Kraja & Gentiana Cane, Economic Faculty, University of Tirana.
• Financial crises propagation in Albania: A Comparison of the Russian and Turkish Crises. Renée Anne Fry, Economics Division, Research School of Pacific and Asian Studies, Australia National University & Elvira Sojli , Warwick Business School (WBS) PhD Student, MSc (WBS).
• Bank Competition (Discussion paper). Seyhan Pencapligil, General Director, National Commercial Bank.
• Public debt and the future of the European Union’s Stability and Growth Pact. Heinz - Dieter Wenzel, Professor at Bamberg University & Klaus J. Brösamle, Jörg Lackenbauer, Bamberg University.
• Turkey’s disinflation experience: The road to price stability. Erdem Basci, Vice Governor of the Central Bank of the Republic of Turkey.
• The road for stability and growth: Lessons from Greek experience. Georgios Oikonomou, Member of Monetary Committee, Bank of Greece.
• Banks and the financing of economic growth policies: contemporary models of socialeconomic development. Adrian Civici, Head of National Strategy for Social and Economic Development (NSSED), Ministry of Finance, & Ina Kraja, Head of Public Relations Department, Bank of Albania.
• Exchange rate arrangements and monetary policy in SEEC and Turkey. Stephan Barisitz, Senior Economist, Foreign Research Division, National Bank of Austria.
• Slovenian experience in approaching EMU. Bostjan Jazbec, Member of Governing Board, Bank of Slovenia.
• The effectiveness of foreign exchange intervention in Croatia. Maroje Lang, Head of Monetary Analysis Division, Research Department, Croatian National Bank.

Conclusions of the Governor of the Bank of Albania, Mr. Ardian Fullani, at the Fifth Conference of the Bank of Albania.

Dear friends !

During two days of the Fifth Conference of the Bank of Albania on "Central Banking in time of integration", having guests from the country and international institutions, personalities of academic and banking area, too many important ideas and suggestions emerged. The tight agenda did not allow detailed discussion on them; however, I hope that they will serve as starting points for further debates and analyses to sort out central bank challenges in the time of integration.

It is somewhat difficult to make a concise summary of numerous papers presented in this conference. I would categorize the main conclusion into two large groups according to the main pillars of the central bank, that is the price stability and the financial sector stability.

Concerning the first pillar, that of price stability, the discussions were focused mainly on the monetary policy effectiveness and central bank independence. To maintain stability is more difficult than to achieve it. Prof.Bolle indicated in a very excellent way that current price stability should be considered as fragile, which requires constant efforts, either by the BoA or by other institutions. Therefore, in his discussion, Mr.Ibrahimi emphasized that the Bank of Albania is prudentially analyzing the risks that we may be faced with in the future on maintaining price stability. He came out with the proposal of adopting a new inflation targeting regime that may be better adjusted to the new reality that the Bank of Albania and the Albanian Economy will encounter.

However, simply the mechanic implementation of this new regime is not a sufficient condition for price stability. A number of other criteria must be met to increase the chances of its success, without adding pressure at the Bank’s reputation. A lot of such challenges were treated in details in other presentations at the conference. Among the most important ones, I would mention:

Issues on central bank independence, which were referred to by most presenters, but I would point out here those presented by Mr. S.Rossi and Mr. L.Papi. The significant role of independence, not only on monetary policy, but also, particularly on the second pillar, that of financial sector stability and development came out clearly in these presentations.

The clarity of Monetary Policy channels and enhancement of the effectiveness of its instruments is another important issue that requires particular attention, notwithstanding the current regime applied. The presentations on this issue by Ms. M. Peeters yesterday and by the experiences of various countries during today’s panel of the conference were very useful.

Fiscal domination remains a constant risk to price stability, as it came out of the experience presented here by Mr.Baschi (Turkey). We hope that the commitment of the government for developing a better coordination of monetary and fiscal policies will continue in the future, as the Minister of Finance, Mr.Malaj stated in his speech. This idea was further
elaborated on in the presentation authored by Mr. Hida and Mr. Haderi.

Dollarisation or FX may constitute another obstacle that places financial stability and monetary policy independence at risk, as argued by Mr. Driessen. Therefore, it is a problem that needs attention.

What inflation rate should be targeted remains a subject of debate. This concern was presented by Mr.Olters. The Bank of Albania is closely addressing this issue in a very prudential manner, so that it does not become an obstacle for economic growth.

In light of the above difficulties for passing to a new regime, as stressed by Mr.Mayes, it is important to implement a robust strategy so as to avoid large mistakes.

Price stability, as stressed some times during the conference, helps economic growth. On the other hand, the second pillar of the Bank of Albania, the financial stability, is likely to play a more important role for economic extension. But, as Mr. Blejer stressed in his speech, stability should not be turned into an end in itself. A good regulated but undeveloped financial sector may be as ineffective as a deregulated sector.

In order to make the basic policies in economy more harmonized and effective, I would emphasize that the banking system and the other financial institutions of the country should be more effective, open and supervised. In the final analysis, it is very important to create a real financial market, where all actors know the rules of game and obey them fairly, as it came out in the presentations of Mr. Niedermayer, Mr. Danielson, Mr. Pencapligil and Mr. Bunda.

In conclusion, I would underline that the challenges ahead of us, on our way to development and integration, become easier when a spirit of cooperation exists not only within the country but also in the regional framework and broader.

Thanking you for your participation in this Conference, I declare it closed.