PRESS RELEASE
Questions and Answers at the Governor's Press Conference, 30 July 2014

Question - Has the Bank's internal control system crashed and what is your personal responsibility in this event?

Answer - As we have stressed during all these days, the internal control system has in no way crashed. We are dealing with a severe event that charges us all with responsibility. We are drawing our responsibilities and everything is being thoroughly scrutinized. It is important to note that there has been no legal breach by either the Supervisory Council or the Administrators. By contrast, the legal and regulatory framework is comprehensive and provides for the management of the Bank of Albania, and the banking and financial sector, according to the laws. As I noted earlier, it is the human element that failed in this particular event, which will be punished accordingly by the law.

In the meantime, the Bank of Albania continues to carry out its normal operations. It is a busy period since, besides this event, we have to continue the Bank's operational activity. This means that the changes and amendments that have to be made will be made, and we have all the means to do so, as stated in the Committee today. The Bank of Albania has all the possibilities and guarantees to ensure sound functioning of its work. It enjoys full credibility both in Albania and abroad, which guarantees normal functioning of its activity.

This unwanted and severe event came like a bolt from the blue, at a time when the Bank of Albania enjoys all the attributes of a solid institution, capable to withstand the several-year global crisis, and maintain the country's macroeconomic and financial stability. The country's banking and financial sectors did not suffer any damages. Moreover, the Bank of Albania stimulated the economy with its monetary and macro-prudential policies. It undertook a number of legal initiatives, ensuring to keep the exchange rate stable, inflation under control and the currency value stable, without prejudice to the country's financial stability. In contrast to many other major global economies, including the region, not a single public sector penny has been allocated to assist the private banking sector in withstanding the crisis. Instead, the banking sector has been a contributor - as much as it could - and continues to fully support the Albanian economy in solving the problems of the past and fuelling its development.

The Bank of Albania has earned its reputation over the years. The highly skilled staff constitutes the foundation of such a solid institution; however, there may have been culprit elements, who can be present anywhere. But, these perpetrators can in no way tarnish the name, reputation, solidity and activity of the Bank of Albania, its Supervisory Council, the Governor, Administrators and its structures. I guarantee that we are scrutinizing this event thoroughly, and drawing the moral, administrative and penal responsibilities. The Bank of Albania has taken all the necessary steps not only to see the case solved, but also to prevent similar events in the future and fully eliminate this operational risk.

Question - Average credit interest rates are at their record low. Monetary policy transmission may not be complete, but at least the average interest rates on lek-denominated loans are at historic lows, implying that the financing cost of the private sector's new investments is at a record low. In the context of private sector-stimulating policies, do you think more should be done, perhaps in a coordinated fashion, to benefit from the actual low market rates?

Answer - As I noted in the half-yearly report, the situation in Europe and the region is highly complex for a number of reasons. A number of European challenges are expected to produce their outcome during the course of the year. We also highlighted the stimulus and good monetary and fiscal policy mix during the second quarter of 2014. Albania's arrangement with the IMF and the World Bank has created a better climate. We can say that we have all the opportunities to achieve better economic development in the future, taking advantage of these stimuli and making them more effective.

I think the banking sector is heading in a positive direction. However, we should not concentrate on the banking sector alone and leave the rest of the economy, the private sector, apart. Once the private sector and banks' balance sheets clean up, they will be in a better position to borrow and channel it into the economy. We expect the second half of the year to be more positive.

In our opinion, our country has all the necessary incentives in place. Under the auspices of the IMF and World Bank programme, Albania has all the opportunities for sustained and better economic growth in the period ahead. This will also be supported by the resolution of some challenges facing the ECB and Europe, in general, in the near future.

The Bank of Albania stands at the forefront of the situation and this is not limited only to preserving the macroeconomic balances. This is very important as there can be no other incentives if we cannot preserve the balances in the economy and the country's financial stability. I, therefore, think that the banking system has all the opportunities to be more active in the future.