PRESS RELEASE
Speech by Ardian Fullani, Governor of the Bank of Albania, at the Conference, Economic Governance in the European Union - organized by the Italian Embassy, Tirana, 5 June 2006

Dear colleagues,

It is my pleasure to be here today to share some thoughts on governance issues related in particular to central banking.

The environment in which central banks and financial market authorities operate has undergone major changes in the past decades. Globalisation and progress of information and communication technology mean new challenges in achieving their objectives. To overcome these challenges, the central banks need to rethink their strategies and restructure accordingly in order to succeed and preserve their sound reputation in this changing environment.

This process would consist in: changes of the legal framework, - organisational restructuring, which may include changes in the way the bank is governed by the board and committees; - improvements in accounting practices, supervisory and human resources standards; - and several other changes.

Albania in the last decade has become part of this wind of change and in meantime we have recognised the importance of good governance for central banks and supervisory agencies. Having realised this need, the Bank of Albania has taken the appropriated steps to restructure. So, we are aiming to move to a more formal inflation targeting over the medium term. Accordingly, we have initiated steps to improve our governance structure and strengthen our analytical capacities. On the governance matters, the open forum that took place last year with top experts from all around the world touched upon many issues regarding the implementation of inflation targeting. However, as pointed out by many of these experts the appropriate model of internal governance is far from being a precise formula. The lecture of Ms. Lucia Quaglia today will touch on this point and help us understand how some institutions are implementing good governance, and consider lessons to be drawn from international comparisons.

Furthermore, let me spend a few more words also about the second important objective of our bank, the banking system stability. A lot of work has been done to encourage the development and consolidation of a sound banking and financial system. I could mention here a few recent measures supported by our bank like: the setting up of a credit information bureau, the analytical development of the deposit insurance scheme, improvement of the bankruptcy framework and collateral enforcement, and strengthening of bank regulation and supervision, which will also assist the Government's anti-money laundering efforts. The international organisation in particular IMF is providing precious technical assistance to the Bank of Albania to support the implementation of the institutional development program for banking supervision developed by the Bank of Albania. In the wake of the privatisation of the largest bank, the financial sector in Albania is finally showing welcome dynamism and the BoA is stepping up prudential vigilance.

As for the globalization issue, Bank of Albania is committed towards institutionalizing the cooperation between central banks in the region. Judging from the meetings organized so far with some of the regional banking authorities, this initiative is progressing well. However, I believe there is scope to enhance regional cooperation further, which would enable us to exchange experiences in the field of banking supervision and best governance practices in the Southeastern Europe which I understand, is also part of Ms. Quaglia's future research agenda.

Let me conclude by wishing you a productive day.

Thank you.