Ardian Fullani: On building capacities for policy design and
implementation
Opening remarks by Mr Ardian Fullani, Governor of the Bank of Albania, at the workshop "On
building capacities for policy design and implementation", Tirana, 3 December 2009.
* * *
Dear participants,
It is a very great pleasure for me to open the proceedings of this two-day workshop, entitled
"Building Capacities for Policy Design and Implementation", organised for the first time in
Albania by the Bank of Albania, in co-operation with the Center of Excellence in Finance
(CEF), Ljubljana, with support from the European Commission, European Central Bank, and
International Monetary Fund. Welcoming you here in Tirana, allow me to express my
gratitude for the excellent work done by the CEF in the course of these years, to the benefit
of our region.
Since our Washington meeting last April, the effects of the global crisis increased their
presence in our region; however, as I have already emphasised even earlier, they did not
immediately concert to full blown economic and financial problems. The extension of crisis
effects to the real economy, to the budgets of governments and to financial sectors of the
region, was mitigated by sound macroeconomic policies pursued in the recent years and by
the availability of International Monetary Fund funding on an unprecedented scale, in
coordination with support from the European Commission and the EBRD.
Due to this intervention, and mostly due to prudential policies pursued by the central banks
with regard to financial stability and financial supervision, the region prevented not only twin
crises in our banking systems and foreign exchange markets, but also any kind of meltdown.
Nonetheless, this crisis has been a wake-up call. We agreed on this in our meeting last April,
in Washington, among senior policy-makers from the region and from EU and IFIs.
Now that we have managed to prevent the crisis, we must start the evaluation of the
collateral damage of our response to the crisis. In this respect, it is very important to asses
not only the long run sustainability of our region's equilibrium, but also the effectiveness of
our short run response. It is crucial to plan and implement our future moves intelligently for its
reversal in line with new normalities.
While we are not out of the woods yet, it is important to make sure that the past year's fiscal
appetite that characterised our region does not become part of this new normality. Actually,
we need to do some deep thinking about aspects of our policy regimes - starting with the
design of monetary policies, continuing with the way they are anchored and the building of
due capacities for a greater effectiveness of monetary policy in the future.
That is why we agreed to put in place today's workshop, as part of a continuing process of
reflection and reform.
In our discussions here in Tirana, we will begin with questions of policy design, which are
fundamental to set the stage for the later topics we will come to. We have suggested in
advance several questions that may help stimulate the discussion, covering some of the key
questions that are certainly left in my mind, as a practitioner, after navigating through the
crisis so far.
The issues of policy design include the questions how much room for manoeuvre there has
been to use discretionary macro policy measures; how far fiscal policy in future should build
up a buffer against macro-financial risks; how far national monetary and prudential regimes
have been able to shield us from turbulence; and whether we now see a need to attract new
kinds of capital flow - perhaps to change the growth model in the region.
This discussion of policy design will bring us to our second issue. It concerns the role of
external anchors for monetary policy. One point of consensus in our Washington meeting
was that we need to revisit some aspects of this anchoring process, and the way it interfaces
with countries' efforts to build up their own internal anchors over time.
There are several questions about the future role of external and internal anchors. They
include some reflection whether there is a need for more co-ordination and synergy between
our policy dialogues with the IMF and the Commission; how the Commission's fiscal
surveillance (through Economic and Fiscal Programmes, Pre-Accession Economic
Programmes, Convergence Programmes) can be deepened and serve more as a
commitment device; how far there are lessons to learn about monetary anchors and
prudential coordination mechanisms for the EU accession of our region; and how we -
including the external actors - can foster stronger domestic anchors in various forms,
ranging from medium-term fiscal frameworks to more effective policy co-ordination
mechanisms.
Finally, we will turn to the issue of capacity-building. This is a question on which we agreed,
at this workshop, to already provide some operational input to the CEF as it develops its
work programme in this area. There is a long lead-time in the effectiveness of
capacitybuilding, although fortunately the CEF had already taken the initiative a few years ago to
ramp up its contribution in areas such as financial stability and policy co-ordination, so it has
a head-start.
In the field of capacity-building, we need to consider: what are the top priorities, and where
are the gaps to be filled through initiatives in terms of training workshops, technical
assistance, and cross-country exchanges of experience.
This will bring us to look carefully at the design and implementation of fiscal policy, among
others, and the way policies come together through domestic co-ordination processes. And
we also need to identify the needs in the areas of monetary and prudential policies, where
the CEF's member countries have urged it to continue expanding its activities.
This is a full agenda, and I am sure it will not be the last time we get together to exchange
views on these issues.
I believe strongly that we stand to gain immeasurably from considering these challenges on a
regional basis.
We can learn from each other's experience; we can engage at times in a joint dialogue with
the external actors in the region; and perhaps our political leaders can find some
opportunities to launch reform initiatives in parallel - for example, in developing structural
reforms to help promote a flow of new capital to, and within, this region.
In this spirit, I look forward to very fruitful discussions - now in Tirana and in the future!