Bank of Albania organises the Annual Conference

Publication date: 01.11.2018


“Monetary Policy, Economic Integration and the “New Normal””

The Bank of Albania co-organises with the London School of Economics and Political Science (LSE) the annual conference: “Monetary Policy, Economic Integration and the “New Normal””, on 1 November 2018.

This conference is organised under the auspices of the Governor of the Bank of Albania, Mr Gent Sejko, and was attended by the Prime Minister of the Republic of Albania, H.E. Mr. Edi Rama, the Minister of Finance and Economy, Mr Arben Ahmetaj, Government ministers and members of the Albanian Parliament. The conference was also attended by governors, deputy governors, and high-level representatives and management boards from other central banks, Ambassadors in Albania, representatives from international financial institutions, such as the International Monetary Fund, the World Bank, the European Bank for Reconstruction and Development, representatives from the academia, the banking and financial system, the media, and staff members of the Bank of Albania.

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This conference is organised in the framework of the Co-operation Agreement between the Bank of Albania and the London School of Economics and Political Science (LSE).

Organised in four sessions, conference proceedings were opened by the Governor of the Bank of Albania, Mr Gent Sejko; the Director of the LSE’s Institute of Global Affairs (IGA), Mr Erik Berglof; the Minister of Finance and Economy, Mr Arben Ahmetaj; and the Prime Minister of the Republic of Albania, H.E. Mr. Edi Rama.

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In his address, Governor Sejko presented an overview of macroeconomic developments in the world, the region and Albania. He said that the recent reports by prestigious international financial institutions highlight that the prospects of the global economic development remain positive.

Focusing on the economic outlook in Albania, the Governor emphasised that Albania is set on a steady positive trajectory of economic growth. The implemented monetary policies have created adequate premises for an increasingly fuller utilisation of production capacities and the convergence of inflation toward the target.

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“Furthermore, the long series of structural reforms - whether already undertaken or being currently implemented - should pave the way for faster, sustainable and comprehensive economic growth” - the Governor said.

Governor Sejko added that the Albanian banking sector remains liquid, profitable, and well capitalised. This sector appears resilient to potential shocks and has adequate capital and liquidity to cover the needs of the economy for financing and added that the topic of this conference is related with the challenges that policy makers face in terms of growth and of economic and financial stability.

The Governor underscored that the monetary policy often faces limited effectiveness, and that the monetary policy alone does not have adequate instruments for generating a sustainable acceleration of the growth pace in the long term.

The Bank of Albania has adopted an integrated approach to boost the effectiveness of the monetary stimulus, both by adopting new instruments and initiating a series of structural reforms aimed at improving the monetary policy transmission mechanism.

With regard to instruments, the Bank of Albania began to employ the forward guidance tool, and applied countercyclical macro-prudential measures to support the growth of lending to the economy.

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 With regard to the transmission mechanism, the Bank of Albania has undertaken a series of structural reforms in the financial system, in cooperation with the Government of Albania. These reforms were aimed at further developing the financial market, improving the legal and regulatory environment with a view to lowering the credit risk, as well as reducing the phenomenon of foreign currency borrowing.

At the end of his address, Governor Sejko pointed out that the need for the co-ordination of domestic policies and the increase of interaction between markets and authorities is indispensable. This national, regional and global co-operation would help avoid undesirable consequences not only for small and emerging economies but also for large economies.

Governor Sejko thanked the participants and added that the panellists’ conclusions will be very useful to everyone and will portray and fully present the risks and benefits related to the relevant issues.

The first session of the conference addresses the main elements of the "new normal" of monetary policy and central banking in advanced economies, and it assesses their implications. The focus will also be on small integrating emerging economies in the "policy sphere” of the ECB.

During the second session, the discussion is focused on the experiences and lessons from several emerging economies; the coherence and complementarity in the newly emerged safeguarding landscape; and implications for home-host supervisory collaboration with non-members.

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The third session discusses the effectiveness of post-crisis regulations and the transformative impact of fintech on the financial system, the economy in general and financial inclusion, and how regulatory and monetary policy frameworks can be prepared for this new world.

The fourth session brings together in a discussion panel, namely: Governor of the Bank of Albania, Mr Gent Sejko; Governor of the Central Bank of Iceland, Mr Már Gudmundsson; Governor of the Central Bank of Bosnia and Herzegovina, Mr. Senad Softić; Deputy Governor of the National Bank of Croatia, Mrs Sandra Švaljek; and the Deputy Governor of the Central Bank of the Republic of Kosovo, Mr Sokol Havolli.

This panel will discuss the main challenges for small economies in the "new normal" and the relevant responses from central banks and authorities.