Ardian Fullani: Monetary policy challenges in the framework of approximating
the Bank of Albania to the European Central Bank
Greeting speech by Mr Ardian Fullani, Governor of the Bank of Albania, at the workshop organised by
the Bank of Albania in cooperation with the GTZ, Tirana, 8 December 2004.
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Honorable participants,
I would like to express my pleasure for participating in this meeting, whose topic has been of great
interest to me, and not accidentally I expressed in my first public pronouncement the approximation of
the Bank of Albania to ESCB pattern as one of my essential challenges. I had the possibility to discuss
this issue even with the Vice President of the ECB, Mr. Papademos, at a meeting in Frankfurt, where I
launched the idea to be assisted by the ECB and member banks of the ESCB on approximating our
system with the European one.
Trying to spare the time for other discussions of interest in this meeting, I would like to briefly mention
some of the main steps to be undertaken by the BoA in the integration process with the European
System of Central Banks, a process that requires not only time, but also dedication, lobbying, financial
resources and above all, capable human resources.
1. Reviewing the legal and regulatory framework of the Bank of Albania and of the
financial system in Albania
In integration process, the reviewing of laws and by-laws is of priority, particularly in the context of the
prerequisites that a country aspiring for membership has to meet in the central banks area, in financial
and banking system and even broader. In spite of the so-far achievements, much work has to be
done. Therefore, the identification of our needs and priorities in this direction would serve as the first
step.
The Bank of Albania is not the sole authority in supervising the financial operations licensed in
Albania. In this sense, the reviewing of laws and bylaws, involving not only the banking system but
also the financial one, would open the way to more effective supervision of the overall financial
system. This process would serve not only to further develop the financial system but also to assist in
increasing the institutional cooperation between the banking and financial system, thus leading the
cooperation between these systems to a higher level.
2. Reviewing the organizational and institutional system
It is natural that the pattern to be pursued is that of the ECB and ESCB. In this issue, much
importance will be given to the institutional development of the Bank of Albania over the mid-term
period, which will be based, above all, on meeting without conditions of a very important requirement
of any aspiring country, which has to do with the central bank independence. The institutional and
documentary approximation to practices on which the ECB is based and operates will be the main
principles of the BoA agenda.
3. Improving the monetary policy and operational framework
From the viewpoint of operational monetary policy framework, the Bank of Albania is a relatively
advanced institution, but the same consideration may not be valid concerning its transmission
mechanism. Significant improvements are required for the development of banking and financial
markets. So, we may mention: the development of lending to economy, especially in Lek, thus
creating a better extension of operations according to demand, and reducing the transactions in
cash.
In the function of market development, positive tendencies are expected in the future, in terms of
increasing competition and banking intermediation efficiency.
Concerning cash reduction in economy (money outside banks), the BoA is not going to work in
campaigns but will be led by a more active philosophy in terms of encouraging banking products,
completion of clearing systems, use of credit cards not only for payments but also for general services
and particularly for utilitarian ones.
The identification of factors impacting on inflation and the magnitude of this impact remains an
important element, thus creating possibilities for a more accurate inflation forecasting. An important
role in this direction will be played by improvement of research and information abilities and the
system of statistics within the bank, which will also be subject of discussion by the BoA
representatives in this meeting. We may mention here the establishment of an Institute of Scientific
Research of the Bank of Albania, with a regional dimension, that will impact significantly on raising the
standards.
Concerning price stability, the necessary institutional framework of the Bank of Albania, the
independence, credibility, accountability and transparency should be ensured and strengthened.
Dear participants,
The above issues constitute some main pillars, which will create a real approximation of the Bank of
Albania to European System of Central Banks. On the other hand, I am convinced that today's
meeting will be a concrete step in this direction. Wishing the successful continuation of this workshop,
I express once more my determination to lead the integration process of the BoA towards ESCB.