BANK OF ALBANIA

PRESS RELEASE
Questions and answers at the Governor's press conference on 2 October 2024

Publication date: 02.10.2024

 

Question: In your last report at the Parliament, you requested a kind of collaboration with Government, with fiscal policy to encounter the fluctuations in the exchange rate. In concrete terms, what are the measures you consider the Government should take and has there been any discussion between the parties?

Governor: We coordinate and harmonise the monetary policy with the fiscal policy, with Government, on ongoing basis.  There is a continuous collaboration in this regard.  Naturally, in terms of foreign exchange rate, the Bank of Albania has in place its monetary and operational policy, which is coordinated with the fiscal policy of the Government.

We have been discussing with the Government on the needs it has on expenditures and its budget completion, also regarding the reaction of debt payments in the future, in order the whole development and this coordination of fiscal policy work of government to serve to the exchange rate stability and to the coordination of monetary policy with fiscal policy.

Question: The Bank of Albania has initiated recently a set of regulatory and legal amendments regarding the supervision of non-bank financial institutions, at what phase are we currently?

Governor: As you said, the Bank of Albania has initiated from time a package of regulatory amendments for non-bank financial institutions and particularly regarding the consumer protection, that are the borrowers of these institutions.

First, I would emphasise that the Bank of Albania has had and has in its focus the soundness and protection of these non-bank financial institutions in relation to lending to economy as these institutions have an impact not only on rural areas but also on the entire Albanian society and economy covering for lending to small businesses. But, in parallel we have noted that there have been problems regarding the overburden of debt of some consumers and in this context the Bank of Albania has made certain regulatory amendments.

We are working with the World Bank for a more complete regulation regarding consumer protection in the financial field which will be finalised very soon. Meanwhile, in the today meeting we have approved certain amendments in the regulation on credit risk management of non-bank financial institutions with the elements of consumer protection. These amendments define a better financial analysis of borrowers to show their ability for taking a loan, certain limits regarding eh age of the borrower, the assessment of creditworthiness as well as some other elements regarding the number of loans, that is they cannot obtain simultaneously more than two consumer loans or may not be exposed more that needed pursuant to the criteria and parameters of the risk analyses that financial institutions should carry out. In the framework of these amendments, to the non-bank financial institutions it will be required to adopt their internal regulation and manuals of protecting borrowers from overburden of debt.

The main purpose is the protection of borrowers, but at the same time it is aimed at the protection of these institutions as well from non-performing loans.  If exposed at high levels towards the borrowers in default for the repayment of debt, these institutions themselves would have a higher rate of non-performing loans and would face losses. These are the amendments that we have approved in the today's’ meeting and I think these amendments will absolutely have a positive impact on the non-bank financial institutions.

These amendments have been discussed with the non-bank financial institutions and they have provided a positive opinion. Thanks to these amendments their further work will be improved as well. Nevertheless, next by reviewing the regulation on consumer protection, for the purposes of transparency and the review of interest rates towards their lowering. 

Question: Regarding the regulation that you just mentioned, when it is foreseen to enter into force?

Governor: This regulation is foreseen to enter into force in January 2025, as I emphasised in the previous communication. That is, the regulatory measures are foreseen to enter into force in January of year 2025, all together as a package. There might be exemptions, if there will be necessary to alter the informatics systems of non-bank financial institutions. There might take place a postponement of the deadline, but it will depend on the discussions with the interest groups. If there will be specifically needs for alterations in the information technology systems then we may consider a postponement of 2-3 months. Though, the stipulated measures and these amendments that I just mentioned shall enter into force in January of year 2025.