GOVERNOR PUBLIC APPERANCE
Comment from Prof. Dr. Shkëlqim Cani, Governor of the Bank of Albania in the Gazeta Shqiptare newspaper, ''Anti-cash'' on the right track!, July 3rd, 2004

"Being open and clear in explaining its strategy, it is crucial for an independent, central bank to maintain its credibility". Based on this postulate of the European Central Bank, the Bank of Albania (BoA) is committed in the common program with the government and the banking system to reducing cash transactions in economy. Therefore, public communication through the media is quite important. The success of the "Beyond cash" program depends on transparency and public awareness. The program, intended to be applied in a two-year span, intertwines legal commitments and private sector incentives, assertiveness from banks in increasing banking services to clients, media and civil society support.

Ministry of Finance, the BoA, public sector entities and second-tier banks are one aspect of this program, and together with the commitment of the business, civil society, media and individuals, shall guarantee a recognized success of the program. The driving force for such a program was the cash extent in the economy. Although cash comprises 26 per cent of the total liquidity, and it is the lowest level of these last years, it still remains a concern to the BoA. According to the Bank of Albania's surveys, only a small number of people hold a bank account. Bearing in mind that the negative impacts of using cash in economy are considerable and related to economic and financial crime, the BoA has listed cash reduction as one of the priorities of its performance in the two coming years. The extensive use of cash in economy helps somehow even the informal economy, enabling thus businesses dodging from taxes and customs tariffs. It facilitates also the manipulation of financial documentation. Therefore, the BoA in cooperation with other institutions has prepared a common draft-strategy. On one side, this strategy underlines the public awareness and information, and on the other side clear-cut steps from public institutions and the banking system.

Salaries through "Cashtronik"

The BoA was the first to take the step in the pilot project of channeling salaries through bank accounts, in one of the banks selected based on competitive offers and a transparent process. This step taken from 300 employees of the central bank and its five branches is really significant and attended carefully by the Ministry of Finance, which on behalf of the government is committed to gradually channeling public system salaries through banks. On the other hand, the banking system itself, being on the alert because of a relevant liquidity level emerging from the employees in the public sector, is showing a growing competition and aggressiveness, for instance in cutting commissions, opening new branches, investment in ATMs, offering attractive banking products to the "new" clients", etc, giving thus real values to the program.

Actors and casting

Since when we initially sketched the first phase of the "Beyond cash" program about a year ago, I was aware of its success and positive outcomes. Now, although still early, we can say that the program is on the right track. Second-tier banks sometimes organized and sometimes on their own because of competition reasons, have augmented banking services and products marketing. 24 hours banking, the satisfactory spread of bank branches and Internet banking are some of the banking system undertakings. The public sector, despite its typical bureaucracy, seems to accept the idea of cooperating with the banking system, putting thus on the shadow the idea of moving "money in sacks" from banks to institutions and replacing it with cashtronics and bank accounts for every employee. This is a significant step in the present situation of the banking tradition in Albania, since it breaks the ice in approaching banks and benefiting from banking services and products. I am quite confident that Albanians will soon adopt banking transactions as much as they did the mobile phones. The business, particularly the part that has now touched international standards of banking operations, seems to have been even quicker in such an undertaking. Thus, some of the foreign companies working in Albania did not use cash transactions, and now Albanian trade companies are approaching banks even for small amount transactions. Media is strongly committed to underpinning this undertaking, and some media companies have already contacted banks, especially with regard to salaries.

Program follow-up

Channeling salaries through the banking system is the first step of the "Beyond cash" program, which is expected to bear a considerable impact on liquidity channeled through banks. The Ministry of Finance liberalized budget service through signing the agreement with second-tier banks. Its next step is expected to be the possibility that business payments pass to the budget through the banking system. Outcomes are going to be positive: cash in circulation will drop; incomes from taxes and customs are going to rise, etc. In a second phase, the program foresees to improve the legal and legislative framework of electronic payments and Internet banking. The BoA has under process the ACH project, financed by the World Bank. This project, following the successful RTGS project, will complete the necessary logistics of a modern interbank payment system. Second-tier banks are quite engaged in the banking services marketing by launching an informative package, especially credit and debit cards. Meanwhile, the role of media in informing the public on the advantages of this program is ever more crucial, increasing thus the chances for a successful program in channeling cash transactions through banking transactions.