BANK OF ALBANIA STATEMENT
Interventions in the money market and foreign exchange market during the fourth quarter of 2005

In contrast to the previous quarter, the banking system was characterized by an excess liquidity during the last quarter of 2005. The constant liquidity injection into the banking system by the Bank of Albania at the end of the previous quarter and the increase of individuals' investment in instruments in domestic currency (mainly in treasury bills), encouraged by the increase of difference between the interest rates, were the main factors which brought the increase of liquidity in the banking system. Another factor which contributed to the increase of liquidity in the system was the intervention by the Bank of Albania in the currency market during this quarter. Despite the excess liquidity, pursuant to its monetary polity, the Bank of Albania continued it interventions at the beginning of the quarter with one-week reverse repurchase agreements, until the third week of October. Upon the stabilization of the liquidity situation in the banking system and the interest rates in economy, the Bank of Albania changed the direction of interventions, by withdrawing the excess liquidity through one-week repurchase agreements. In average weekly values, the liquidity withdrawn through such interventions was in the level of ALL 1.9 billion.