Gent Sejko: Bank of Albania's achievements in 2022 and challenges
for 2023
Address by Mr Gent Sejko, Governor of the Bank of Albania, at the end-of-year meeting
with journalists, analysts and media representatives and the Governor's Award
ceremony, Tirana, 20 December 2022.
* * *
Dear ladies and gentlemen,
I feel honoured and privileged to welcome in the historical hall of the Bank of Albania,
media representatives and talented students who are brave in competing for
"Governor's Award for the Best Diploma Theses".
In the last year event, I emphasised that we experienced an unusual 3-year period, with
the hope that 2022 would be different, more vivid and more optimistic. Nevertheless,
the end of 2022 is proving a really challenging one, mainly due to the huge shock on
commodity prices of energy, oil and gas, in particular. The increased prices - mainly
engendered from the outbreak of the Russia's war in Ukraine - has generated strong
inflationary pressures worldwide, triggering a difficult time for consumption and
economic growth globally.
Albania is facing the same challenges as well. In November, inflation stood at 7.9%,
somewhat lower than in the previous month, though a high level which is the main
threat to both the macroeconomic stability and to the sustainable and long-term growth
of Albania. In this context, I would like to point out that the latest forecasts at the Bank
of Albania show that inflation is expected to progressively reduce during 2023, and
return to target in the middle of 2024.
In view of an increased inflationary pressures environment, we have embarked on a
gradual process of monetary policy normalisation, aimed at timely returning inflation to
the target and at a rather low costs to the economic activity.
Nevertheless, the sound balance sheets of households and enterprises, the further
expanded Albanian exports, and the decreased uncertainty in response to the expected
reduced inflation will continue to feed the economic growth, in turn the latter is expected
to remain in positive territory.
The sound position of banking system is an added guarantee for the expansion of the
economic activity. The healthy and liquid financial balance sheets of the banking sector
guarantee that the latter will continue to funding the Albanian households and
enterprises, by supporting the expansion of both consumption and investments as well
as meeting the temporary needs for liquidity.
The coverage and transmission in an objective manner of news to public is an important
factor in meeting our objectives for a stable economic and financial environment. In this
light, I am pleased to see that the media coverage of the economic and financial
developments in Albania and abroad has been fully in compliance with our
expectations. For this purpose, I would like to thank you for the professionalism and
integrity you have demonstrated throughout 2022.
In addition, I reaffirm that the Bank of Albania is completely open to listen to your
opinions and suggestions for further heightening our collaboration. The dynamic of
current developments in the global economy coerces both, the Bank of Albania in one
side and the media on the other one, to be more responsible and more devoted in
informing the public in a prompt, transparent and open manner.
I wish that our cooperation, which is at the service of best public interest, will continue
to follow the same model in 2023 as well. You will find that our institution remains a
loyal and transparent partner, which is available to share the necessary information and
clarifications. Our policies and decisions and their impact, as well as the situation
regarding the financial soundness of the banking system and the financial sector,
overall, will be at the heart of our ongoing communications.
Honourable participants,
Financial literacy and research are at the focus of the Bank of Albania's undertakings.
They help us to successfully draft, implement, and convey policies and decisions in
order to safeguard price and financial stability in Albania. Education and scientific
research are conducted to understand economic events, as well as to enhance Bank of
Albania's trustworthiness and expand communication with the economy, financial
market, and the public. In a broader sense, researching, comprehending and
interpreting the economic and financial events are a precondition to ensure the
socioeconomic prosperity of Albania and increase the well-being of its citizens.
The universities and academia play a key role in both these fields. As a result, the Bank
of Albania supports the scientific research and the activity of Albanian students,
studying at university and other academic institutions, in Albania and abroad. In this
framework, I would like to continue a cherished tradition of the Bank of Albania, the
ceremony of Governor's Award for the Best Diploma Thesis.
For 16 years, the Bank of Albania selects and awards research studies conducted by
Albanian students, graduating in Albania or abroad. Over the years, the focus of the
presented research materials is on recent economic issues. The research follows how
the needs and the economic, financial and social events affect the authorities,
businesses and the society. Simultaneously, the process of setting the hypothesis,
selecting and implementing the applied methodologies, is conducted in congruence with
the best up-to-date research practices. This renders analysis and research investigation
valid and professional.
During this year's competition, there were a series of applications received, mainly
focusing on topics that deal with recent phenomena taking place in the fields of
economics and finance. The studies are directly or indirectly connected with the
activities of the central bank. Some of the most interesting topics of these studies were
the following:
the impact of policies on the central bank's balance sheet in the corporate bond
markets;
the impact of credit and the expansion of banking products;
the effect of prices on the real estate market;
the multiplier of government expenses and consumption, and their effect on the
economy.
We gladly assess that the topics presented fulfil the standards of a true scientific
research, correctly addressing the hypothesis, and their validation is based on the
application of contemporary research methodologies, while employing the statistical
data in a correct and structured manner. As a result, reaching conclusions and the
implications to decision-makers are analysed based on a diligent investigation work on
various economic and financial events.
After analysing the topics presented, the Assessment Commission has reached a
unanimous decision on the winners of the first three prizes of "Governor's Award for the
Best Diploma Thesis, 2022". Before awarding the prizes, I would like to congratulate
and commend all the participants in competition for their interest, ideas, methods and
conclusions, which were based on correct methodologies. The submitted materials are
of a high level and the Assessment Commission was hard-pressed when selecting the
winners. However, the three topics that will be presented stand out from the rest
because of their importance and coherence, as well as for having fully employed the
methodology, and diligently having applied and described the assessment methods,
and the interesting findings. I encourage the winners and all the contestants in the
competition to preserve and nurture the same passion and commitment further in their
professional careers as shown in the submitted research works.
Let's go ahead and present this turn winners.
First prize
The first prize was awarded to PEGI MYSHQERRI, a student at the Goethe University,
Germany, for the study on the Master's theme: The effects of ECB Asset Purchases on
European Corporate Bond Markets)". In her work, Pegi has assessed the impact and
channels of the European Central Bank's quantitative easing policies on the interest
rate of corporate bonds. The author has also analysed the behaviour of firms toward
these programs of the European Central Bank, and whether they have affected or not in
the issuance of an acceptable (adequate) debt.
More specifically, Pegi has employed the econometrics methods to assess that both
programs - the purchasing program in the corporation sector (CSPP) as well as the
emergency purchasing program during the pandemic (PEPP) - have had an effect on
the interest rate of corporate bonds, but the scale of the impact of each program has
been different. Furthermore, results show that quantitative easing programs have had a
considerable role in mitigating the lending conditions to corporation in the Euro area,
affecting thus the increase of both the number and volume of corporate bonds issued.
First, I would like to commend the winner of the first prize for choosing this theme; a
rather interesting and relevant theme for banks in advanced economies, but which has
been gaining traction in emerging countries. Undoubtedly, the Bank of Albania has also
paid attention to its research analysis and materials, emphasizing the role of balance
sheet policies on supporting the economy with liquidity, particularly during the
pandemic, without ignoring the risks that these policies may pose, not least, to the
emerging economies.
On the other hand, Pegi has meticulously analysed the theoretical and empirical
literature and the methodological approach, laying out a discussion and presenting
results that deserve the first prize in this competition. I congratulate her for being part of
this competition, and I take the opportunity to wish all participants and winners' great
successes in their professional career endeavours!