PRESS RELEASE
Press Release on the Meeting of the Supervisory Council of the Bank of Albania

Today, on 18 December 2014, the Supervisory Council of the Bank of Albania held its regular meeting. In addition to the monetary policy decision for December 2014, the Supervisory Council analysed and decided on the following:

1 - Extension of the period for the implementation of counter-cyclical measures to boost lending

At the end of the deadline set for the implementation of counter-cyclical measures to boost lending and restrict the flow of banking sector investments with non-residents, the Supervisory Council analysed the impact of these measures since they first became effective in May 2013. Despite the narrow spectrum of action, mainly on the credit supply-side, the Supervisory Council assessed that they made an impact, reducing the growth rate of investments with non-residents and curbing the slowdown of bank lending. Currently, the growth of bank lending remains sluggish and fragile, driven by a number of factors, including the quality of bank assets and the expectations for economic growth. Under these conditions, the Supervisory Council believes that these measures provide incentives for banks to be actively seeking qualitative lending opportunities and ultimately contributing to setting lending on a more sustainable uptrend. For these reasons, the Supervisory Council decided to extend the period for the implementation of these measures, respectively to the end of June 2015 for the measures boosting lending, and to the end of December 2015 for the measures restricting the flow of banking sector investments with non-residents. The Bank of Albania will continue to analyse the form and impact of these measures and take necessary decisions in line with the performance of relevant indicators affected by these measures.

2 - Approval of the Sub-legal Framework on the Activity of the Albanian Financial Instrument Settlement and Registration (AFISaR) System

The bylaws aim to regulate the functioning and operation of the Albanian Financial Instrument Settlement and Registration (AFISaR) system. Putting this system in place will be an important step towards the development of financial markets in general, and government securities trading markets, in particular. Based on the standards of the Bank for International Settlements, this system aims to reduce risks in the trading of securities, by stimulating the increase in their trading and, ultimately, affecting the price formation in the market and contributing to better transmission of the Bank of Albania's monetary policy. The AFISaR will be managed by the Bank of Albania.

3 - Approval of the Regulation: 'On Regulatory Bank Capital'
The amendments to the regulation "On Regulatory Bank Capital" aim to approximate EU directives on the activity of credit institutions and Basel Committee capital adequacy standards (Basel II). The Bank of Albania uses the standardised approach for the calculation of the capital requirement for credit, market and operational risk, reflected in the Capital Adequacy Ratio (CAR), an integral part of which is the regulatory capital. The regulation sets out the authority's requirements to banks with respect to the structure, components and the calculation method of the regulatory bank capital, and the establishment of its minimum level.