Financial stability is a situation in which the various components of the financial system - financial markets, payment and securities settlement systems, clearing systems and financial institutions - function smoothly and without interruption, with each component proving resilient to potential shocks. It would certainly be excessive to consider that an increasing risk of financial instability is the price to pay to benefit from the increasing sophistication, interconnection and integration of the world’s financial markets. This assumption remains to be borne  BIS Review 32/2003  3  out. But I would definitively advocate that the greater the interdependence, the greater the risks of contagion, the more we need to methodically and collectively search for ways and means to preclude the risks of financial instability, and prevent crises from spilling over at the global level. By their very nature and position at the heart of the financial system, central banks attach great importance to financial stability: they are responsible for price stability which contributes to financial stability. In turn, a stable financial environment makes it easier to ensure price stability. The involvement of central banks in financial stability is hence rooted in their role as issuers of money. Central banks are also responsible for the smooth functioning and fluidity of financing and settlement channels: this is the reason for their responsibility in the oversight of payment and securities settlement systems, as well as for the responsibility they often have as regards prudential supervision of credit institutions. The creation of the Monetary Union hasn’t altered these responsibilities.

The gross foreign reserve level, at the end of this period, was estimated at USD 1 billion and 244 million, adequate to cover 5.1 months of imports of goods and services. Based on the aforementioned developments, we may conclude that year 2004 contributed generally in further consolidating the country's macroeconomic equilibrium. Although full data for the yearend of 2004 are not yet available, there is a crystallization of the idea that the primary targets projected in the medium-term plan on the country's development have been met satisfactorily. According to the latest estimations, the Albanian economy grew by 6 percent under the conditions of a low inflation rate, far closer to the bottom level of the targeted band. The structural reforms, through their problematic concerns, have progressed during 2004. All this consolidating process has created the premises for a better stability in the future. The development program of the country for year 2005 already exists, part of which are the primary targets of monetary policy. The primary target of monetary policy for 2005, projected in the monetary program, remains the maintenance of the annual inflation rate within the two-to-four percent targeted range. This target is supposed to be met through the control of the monetary supply growth at an approximate level with the nominal growth of GDP, presuming that the velocity of currency circulation in the economy is stable. In this light, the annual growth rate of money supply for year 2005, projected in the monetary program, is 9.4 percent.