Ardian Fullani: Regional cooperation in South East Europe
Speech by Mr Ardian Fullani, Governor of the Bank of Albania, at the conference organised
by the Central Bank of Bosnia and Herzegovina, Sarajevo, 13-14 September 2007.
* * *
I. Introduction
It is a pleasure to be here today and engage in this discussion on strengthening regional
cooperation. This meeting in Bosnia builds upon other important activities in which we have
come together to discuss similar issues. It is one thing to organize one activity where the
governors of all central banks come together to share their views and agree upon importance
of regional cooperation, but it is completely another thing to have them to bind themselves to
continue the institutional dialogue. Today, we present another proof of such commitment and
show that regional cooperation in SEE is not a slogan but a real process with real results and
products.
II. Why cooperation?
In general the nature and the character of any form of cooperation is shaped by the most
important problems that central banks deal with. Therefore the stage of economic
development, and economic and social challenges faced by our economies are bound to
play an important role in this cooperation.
a. Common challenges
While the overall region seems to experience macroeconomic stability, issues that the central
banks face today in their respective jurisdictions with their main partners bear striking
resemblance. Most importantly we share the same partners. We have all accepted the same
challenges and set similar priorities which converge to the same objectives. Dealing with a
much faster globalization of financial sector than the rest of the economy, guarding
macroeconomic and financial stability in face while this is happening, and the challenge of
European integration define similar problems across the region. Structural reforms I would
consider as the main future challenge. Building a stable financial system, enhancing financial
infrastructure, improving financial markets, deepening and broadening through innovative
initiatives provides fundamental ground for such cooperation.
The memories of the latest episodes that have trembled financial markets in the western
hemisphere, and the architecture of the financial system that is developing in our region
(meaning the same banks becoming major players in each country) should make us aware of
the potential risks. They indicate that each financial market remains highly exposed toward
negative phenomenon that could develop in any of the region's economies.
b. Common destination
In this respect, I see enormous possibility for cooperation and policy coordination in the
direction of information sharing, institution building, modification of the legal infrastructure
and lobbying in European structures. Facing these problems in group rather than separately
will allow to benefit and embrace the positive effects of "economies of scale". I also invite the
ECB and EC to explore the possibility of adopting a "party" treatment for the entire SEE
region, by adopting a specific program for a specific group of countries.
The process of mergers and acquisitions has incorporated financial system of the region into
the bigger European market. This market driven, business initiative of the financial
community, calls for institutional integration as well. Bringing central banks of the region into
the appropriate European structures has the potential to minimize the probability of
dangerous drifting apart into worthless initiatives and create positive energy.
I encourage foreign partners as well as donor agencies to adopt the same logic of
coordination in the process of the compilation and implementation of technical assistance in
areas of integration, institutional building, and financial stability process. This approach and
will benefit the region in several ways but most importantly it will avoid major economic and
social disparities between our economies, which in the long run have the potential to develop
into serious threats to stability.
On the other hand, several differences emerge in certain areas of developments. Yet, this
provides further room for cooperation. It is a fact that our economies have adopted diverse
approaches toward establishing macroeconomic and financial stability. We are at different
stages of integration. It is probably due to these diverse characteristics that contagion has
not been a prevailing phenomenon in SEE region. Along the path of transition our economies
have encountered distinct problems in different moments. Just to point out a few examples:
•
Credit has penetrated deep in the culture of some economies in the region while it
still remains a fast growing new phenomenon in a few others;
•
Some of us have experienced high capital inflows while the others expect to have in
the future;
•
Some pegged their currencies to Euro; the others have not.
For the rest of the region it is very important to know what triggered such different choices.
How did authorities respond to such problems, what to expect, how to react? Due to these
different paths that we have taken and nature of the problems that each economy has
encountered, we are positioned in different parts of the learning curve. There is a great deal
of learning by doing experience we have accumulated during this period of existence, and I
believe that this knowledge must be shared.
c. Common achievements
We have succeeded to establish a network of communication with all central banks in the
region among governors. I have noticed that they have always expressed their enthusiasm to
intensify regional cooperation in this context. I am also happy to say that during my contacts
with respective international organizations, they have highly endorsed our cooperation and
have promised their support with regard to specific problems that characterize financial and
economic development of our region. I want to take this opportunity to thank my dear
colleagues (friends I should say) and the institutions that they lead for the significant efforts
and distinguished contributions provided in several important activities that are or will be
organized by the Bank of Albania in the context of financial stability, monetary policy decision
making, foreign reserve management and economic research.
III. How to cooperate?
On personal grounds I can also identify other important areas of fruitful cooperation which
bear common benefits. I would like to encourage the establishment of an annual SEE Central
Banks Forum. This forum could discuss in details topics such as financial stability, statistics,
payment systems, economic research, and why not human resources. I would like to
encourage active participation of the second and third level Central Banks' managers in this
"Forum - to be". They must follow the example of their governors and engage in a closer
cooperation. They should not only follow up issues discussed and decided amongst
governors, but they can open a dialogue and exchange opinions, identify the best business
practices and standards and then adopt those in their daily work.
IV. Conclusion
I do not know how many times I might have mentioned the word "cooperation" today, but I
hope that you will still tolerate me to close my discussion by saying that I strongly believe in
the regional cooperation. I will never stop promoting this important process among financial
systems of the Balkans.
Dear governors, we have all spent enough time and energy on this important topic, to know
that you share the same opinion as I do. The regional countries are on the right track, leaving
behind the status of transition countries and joining the community of developing market
economies. The central banks in the region need to play their irreplaceable role in order to
sustain their countries in their path to common progress and reforms.
So let's keep up such attitude toward cooperation, it will build confidence in the region and
enhance our efficiency.
I wish the Central Bank of Bosnia and Herzegovina success and prosperity for the many
years to come.
Thank you.