PRESS RELEASE
Questions and answers at the Press Conference of the Governor of the Bank of Albania on October 31, 2012

Question: The limited space for fiscal stimulus in most European countries has increased pressures from markets and governments on central banks to make them adopt a more aggressive monetary stance in terms of expanding the monetary stimuli. Given that Albania is entering into a band of weak economic growth and high public debt, do you feel such pressures on the Bank of Albania?

Answer: No such pressures are felt on the Bank of Albania. On the contrary, I would say that the situation over the past four-five years of the crisis has enhanced the Bank of Albania's independence, transparency and accountability. Naturally, being an important part of the state, it has increased its responsibility for providing all the necessary stimuli to ensure a stable economic development. The Bank of Albania's measures have led to keeping inflation on track and have ensured Albania's financial stability. More concretely, this means that we have ensured a well-capitalised banking system. Even during the crisis, we were prudent to ensure a higher capitalisation rate of the banking system than in Europe. If Europe strives, and will do so even in the future, to raise banks' regulatory capital to 9%, currently this indicator stands at 15.6% in Albania. We will retain it high because Albania is a small country, an open economy to pressures from large economies, which are going to face the negative crisis effects even in the period ahead. Under these conditions, the largest contribution that the Bank of Albania can make is to ensure Albania's macro-financial stability. To this end, the Bank of Albania is ready to cooperate, without hesitation, for retaining Albania's classification level in the international market. This is very important to encourage foreign direct investments, as a key driver of future economic development.

Due to Bank of Albania's measures during these years, a calm macro-financial environment has been created, without any turbulence in the banking sector. This has been achieved without the need for intervening with public money in the financial sector, since it has carried out its capital-related tasks. Albania's situation has not been alike international banking system, where central banks and governments have intervened with public funds to save the banking and financial system.

The Bank of Albania has strengthened the banking supervision, provided the banking and financial market with necessary liquidity, and lowered the key interest rate 5 times in a row. Thanks to these measures, the Bank of Albania has created a proper environment to stimulate the banking system to continue liquidity and collateral structuring process and to increase new loans for economic growth. Against this backdrop, the Bank of Albania pays great attention to developments in the domestic and international markets. It also deems that the best stimulus the Bank can provide is to ensure all the guarantees for the Albanian economy to be balanced over the next year, a challenging year for various euro-area economies and for the whole euro area. 

Question: When you state that the banking system should be more flexible to support the private sector, do you consider the financing cost cut as well?

Answer: The Bank of Albania's policy is easing, but what matters today to the banking and financial system is just better analysis and negotiation of business plans to increase lending. The Bank of Albania has provided all the necessary stimuli so that the payment system costs are at minimum. As also highlighted in the report, the monetary policy transmission in the conditions of the interplay between monetary and fiscal policies has been admirable. This has been passed on to lower T-bill yields.

Question: You mentioned a low level of consumption. Precisely, to stimulate consumption, confindustria sought further key interest rate cut. Why didn't you accept it? Secondly, how much is the non-performing loans rate in Albania? 

Answer: The key interest rate is an executive decision of the Bank of Albania's Supervisory Council. With regard to non-performing loans, the figure is found in the report.