Research Papers

The use of foreign currencies - particularly the US dollar and the twelve currencies constituting the euro - is present in Albanian environment, the same way they are used in all of the open economies in developing countries. The practice of foreign currency use in Albania extends from the price policies of the domestic commercial enterprises, to Albanian families holding their savings in foreign currencies, bank activities and their business relationship (in crediting the economy) etc.

Albania has the highest rate of foreign capital inflow. This is due to small number of banks inherited from the past and the priority given to privatization of banks as there are few banks subject to privatization rather than to more flexible criteria for bank licensing. Yet, this situation might be an indicator of a more friendly attitude Albania has toward foreign capital inflow.

The idea of preparing such a working paper came with the change of the tax system at the beginning of 1998. The used argument to justify this measure was that our country had the lowest level of taxes in the region and that there were still spaces to their extension, that foreign capital attraction based on a liberal system regime, already adopted by our country. As really tried to be evidenced by the subsequent paper, neither of these arguments based on a well-grounded terrain.

Enhancing central bank independence is a recent worldwide trend, greatly supported by academics and researchers. Does Bank of Albania fit into this trend? Can Bank of Albania be defined as an independent central bank? How does it stand vis-à-vis other central banks? What measures can be taken to enhance Bank of Albania independence? This paper is aimed at providing answers to these questions.