BANK OF ALBANIA
BoA and WB’s FinSAC organise a Regional Conference on ''Recovery and Resolution planning''
Publication date: 15.11.2018
On 15 November 2018, the Bank of Albania, in cooperation with the Financial Sector Advisory Centre (FinSAC) of the World Bank, organized a Regional Conference on "Recovery and Resolution planning".
This conference was attended by senior representatives of the supervisory and resolution authorities of the European Union, of the countries in the region and of commercial banks operating in Albania.
The issues addressed at the conference focused on recent developments in recovery and resolution planning in the EU, the challenges ahead for their implementation in our region, the experiences of central banks and resolution authorities in the design and evaluation of recovery and resolution plans, on the cooperation and coordination between the responsible authorities.
Organised in four sessions, the conference proceedings were opened by the Second Deputy Governor of the Bank of Albania, Ms Natasha Ahmetaj.
During her speech, the Second Deputy Governor Ahmetaj stated the difficulties encountered during the global financial crisis period 2008-2011, by the governments of various countries, which were forced to use public funds by injecting money and issuing guarantees for distressed financial institutions.
She said that at the time, this situation served to reflect on the appropriateness of regulating financial markets when facing crisis and highlighted two significant shortfalls in the regulatory framework. "First, the banking legislation established clear rules for the orderly entry of new participants in the market but did not define mandatory requirements for the orderly exit for troubled market participants. Second, the high level of financial integration caused internal shocks in a given country to be transmitted across borders to other countries, transforming it into a global issue -Ms Ahmetaj said.
She added that the post-crisis analysis, motivated the European Union to assess issues related to banks’ recovery and resolution. The Banking Union has introduced harmonized rules about resolution through the activation of the European Bank Recovery and Resolution Directive (BRRD) for all member states, and has established the Single Resolution Mechanism in the euro area.
The new recovery and resolution Law provides the Supervisory and Resolution Authorities with the legal capacity and the necessary instruments for the restructuring of bank’s operations, in the event its possible failure jeopardises financial stability or undermines the other objectives of the regulator.
The second Deputy Governor Ahmetaj said that the model of global integration is the economic model that has been adopted by most of the countries in transition, such as Albania. In this regard, the Albanian banking market - said Ms Ahmetaj - has demonstrated a clear willingness and objectives for a swift integration with the legal framework of the European Union’s banking system as well as with its significant changes since 2008.
Moreover, she highlighted that even though there were no cases of bank failures in the Albanian banking sector, while developing hypothetical scenarios for coping with a potential exposure of the Albanian economy to the Greek sovereign debt crisis, some loopholes were identified in our banking legislation. For this reason, during 2015, with the support of World Bank’s FinSAC project, the Bank of Albania started the difficult but necessary work of harmonizing the European Directive in a new Albanian law.
The Law ''On the recovery and resolution of banks in the Republic of Albania'’ entered into force in July 2017, vesting the Bank of Albania with a new attribute, i.e. the Resolution Authority. This attribute completes the financial security mechanism of the banking sector, with the Bank of Albania responsible for regulating and supervising the banking sector, drafting macro-prudential policies, performing the function of the lender of last resort as well as the implementation of banks’ resolution.
In the end of the conference, the Second Deputy Governor Ahmetaj, highlighted that this conference is the culmination of the work of the Bank of Albania in the past 18 months for developing a complete framework for bank recovery and resolution.
Thanking the participants, she concluded that she was confident that the proceedings of this conference will serve to share experiences and will contribute to building new bridges to coordinate the efforts from all parties for a sustainable financial system, within and beyond geographical boundaries.