Today I would like to address our key challenge in normalising our monetary policy instruments: preserving monetary accommodation, while switching back from net asset purchases to forward guidance on policy rates as the main instrument to steer our monetary policy stance. While this rotation proceeds, we will continue to operate with multiple, complementary instruments, including our policy of reinvesting the principal payment of securities purchased under the APP. The state of the euro area economy Following more than five years of increasingly broad-based economic expansion in the euro area, recent developments point to some loss of growth momentum. Preliminary data show that euro area real GDP expanded by 1.7% year on year in the third quarter of 2018, down from 2.2% in the second quarter. The slowdown in euro area economic growth since the start of the year has reflected in no small part a retreat from the strong growth of 2017. One-off country-specific or sector-specific factors have also contributed to slowing production in recent months. But factors related to protectionism, financial market volatility and vulnerabilities in emerging markets are creating headwinds that are becoming increasingly noticeable. Surveys of euro area business activity and sentiment indicators have softened perceptibly relative to their earlier highs, although they remain in expansionary territory and are still above long-term averages for most sectors and countries. Overall, domestic demand continues to be supported by favourable financing conditions, as well as by the robust labour market and steady income and profit growth that these conditions have fostered.

In our region, these institutions are typically banks. In my view, these banks should become subject of a more stringent regulatory framework, in terms of capital and liquidity requirements, business and risk profile, including contingency plans. The supervisory authority should always be prepared for the worse and make sure that crisis management procedures are complete and tested. In this process, valid recommendations of international organizations will be closely followed for adequate implementation over time. It is important to have close coordination with other public authorities in the country, including government. 3. Anchors of macro-prudential policies  The role of anchors in monetary policy is well known. I mentioned before that an important lesson from the crisis for authorities would be to rigorously pursue countercyclical policies. I would like to stop a bit here and focus on this issue. I believe that Albania was prepared for the crisis because IMF programs have played an important role as a credible foreign anchor for economic policies. The IMF programs and similar EU membership process have played a similar role in all CEE and SEE countries. However as the countries have matured out of these programs or joined the EU, the political incentives to continue fiscal consolidation have been fading away. Current events show that the symptoms have spread to other older members of EU, where such policies become the reason behind instability. Therefore the role of anchors is very important for preserving and safeguarding financial stability. Sound, clear and enforceable fiscal rule would be an important step.