PRESS CONFERENCE
Q&A during the press conference on monetary policy decision-making of the Supervisory Council of the Bank of Albania, June 30, 2010

Question - You mentioned in the last week's banks' forum and in your statement today that the new Bank of Albania's operational target will be steering the interest rates close to the key interest rate. Can you provide us with more information on the way this will be achieved, the scenarios used and the concrete application of this target?

Governor - In practice, this shift marks the formalization of the last three years' operational perfection and efforts. Testing the inflation target implies that our operational instruments like M3 and foreign reserve will continue to play a role in the future, but the primary role will be approximating the market rates to the Bank of Albania key interest rate. That is, with more information and greater transparency in place, the Bank of Albania's operations will be more market efficient in the medium run. This move converges the Bank of Albania's operational framework to the European Central Bank's one. This move is formalized after long discussions with the banking sector and thanks to you, the media, for transmitting it to the public. I believe that constant dialogue and other structural reforms, like the pension reform, need to persist and they will aid the market deepening and development and enhance our policy efficiency as well.

Question - Do the current rates of Government's domestic borrowing represent a concern that may violate the access of private entrepreneurship to borrowing, considering here the future expectations, a possible failure of the Euro bond auction and consequently higher Government borrowing?

Governor - We have to make it clear that all Bank of Albania's stands put an emphasis on the development of the private market, which has been, is and will be the key generator of Albania's economic growth. By all means, the Bank of Albania considers that the domestic borrowing of EUR 25 million will not affect the country's macroeconomic parameters. A portion of it, about EUR 14 million, was provided through non-residents' participation in auction. However, the Bank of Albania deems that borrowing should be oriented to foreign markets in order to provide the Albanian market with sufficient room for credit.