PRESS RELEASE
The Challenge of 2004: The reduction of Cash and its substitution with banking operations - Governor's lecture in the Faculty of Economy at the Aleksander Xhuvani University in Elbasan

Today, the BoA governor Mr. Shkëlqim Cani organized a special lesson with students of Faculty of Economy at the Aleksander Xhuvani University in Elbasan. The subject was: The Challenge of 2004: The reduction of Cash and its substitution with banking operations.

In the introduction, Mr. Cani presented the causes of the cash money circulating in the Albanian economy and its independence to the informal and non-official economy.

Bank of Albania considers the reduction of cash in economy as a complex issue not only for the Central Bank. The BoA program on the reduction of cash and its substitution with banking operations requires the cooperation of the most important stakeholders of the economic development of the country.

The first stage of the BoA program on the reduction of cash in economy was closed in November 2003, with the organization of an inter institutional round table. During this phase, there were organized many meetings and discussions between the Ministry of Finance, Ministry of Economy, Bank of Albania and Second Tied Banks, KESH, Albtelecom, Albapost. This phase is considered as a period of awareness on the large use of cash in our economy, mainly for public institutions.

The Albanian government is very interested in reducing this phenomenon, because of its direct impact in finding efficient ways to the economic growth of the country, because money is canalized in official ways and so it become used through the banking system. By this way, part of the economic activity of the country became "unidentifiable". This element brings to the fairly opinion that the Albanian government (Ministry of Finance and Ministry of Economy) is the closest collaborator of the Bank of Albania in this program.

How cash can be reduced in the Albanian economy?

Banks, businesses and individuals are one aspect of the relationship that serve to the reduction of cash, while the government with its respective administrative structures (General Directorate of Tax and Customs) have a determined role in the regulation of this relationship in favor of the non-cash.
Public administration can operate in many important directions, by fulfilling thus, the regulating role of the state in this large relationship. Let's list some of the directions:

• Payments and revenues in favor of the state balance should be maximally performed through the banking system. This measure aims to involve business in executing only banking transfers.
• The obligation of opening accounts and performing banking transfers in accordance with the fiscal bodies should be taken not only from the large business, but also from the whole Albanian business;
• The stimulation of the large use of different banking forms of payments as checks etc. A considerable encouragement in this direction should be given to the small business as well;
• It is considered that now it's time to settle the obligations in form of salaries and other compensations and bonus for the public administration only through banking accounts. Here can be tackled also the idea of canalizing pensions through banking accounts;
• The installation and implementation of the clearing system is an important step that helps the relationship: bank - client (business or individual) - tax office and customs - statistical information system.
• The review of the legal and regulative system that helps the problem we are dealing with today;
• The performance of monthly obligations (power, water, phone, health reimbursements) of public administration employers through banking transfers.

Second tied banks play a very important role in the relationship economy-client-cash. For the banking system, we consider that it's time to act more aggressively, especially today, when it is expected the competition in the banking market to further grow up with the presence of the Raiffeisen Zentral Bank.

Relating to the banking agencies, there are considered some necessary measures as the following:

1. The presence of small agencies near the points where are collected the periodical debts and other fiscal debts; near to small communes and municipalities.
2. The building up of an electronic system, which would verify online the e-cards state. This is a step that can encourage the massive utilization of the credit and debt cards.
3. The increase of the banking services and the potential reduction of commissions used by the banking system.
4. The expansion of the banking business marketing.

Business is an important component of the relationship government-business-bank, built up on an understanding, ruling and respecting basis equally from all and for all.

Public is a universally player of this program. At first, it must understand the scope of the program, then know and use contemporary instruments of payments, by increasing the volume of its transactions through the banking system.