These studies – at least their early results – confirm the farsightedness of some of strategic choices of the ECB. Liquidity, money, credit have always been – since 1998, when the Bank received its mandate from the founders of the monetary union – qualifying variables of the ECB’s reference model and its strategy. The monetary analysis requires a constant monitoring of banks’ assets and liabilities as sources of information on the assessment of risk in the markets and the economy as a whole. This analysis commits the Governing Council to adjust the tenor of monetary policy to ensure the  5  The pre-crisis new-Keynesian paradigm and the monetary policy strategy of inflation targeting derived from it are outlined in Clarida, R., Galì, J. and Gertler, M., “The Science of Monetary Policy: A New Keynesian Perspective”, Journal of Economic Literature, Vol. XXXVII, 1999, pp. 1661–1707. These were superbly expounded in Woodford, M., Interest and Prices, Princeton: Foundations of a Theory of Monetary Policy, Princeton University Press, 2003. BIS central bankers’ speeches  5  long-term growth of monetary aggregates and credit consistent with the potential for economic expansion. In this sense, the monetary pillar of the strategy can be interpreted as a strategic reinforcement that helps to prepare correction mechanisms in situations where macroeconomic imbalances are having difficulty in manifesting themselves in inflationary pressures. The monetary analysis gave important warning signals in the years preceding the crisis regarding the existence of deep macroeconomic and financial imbalances.

Nonetheless, potential emergencies arising from contamination from euro area partners would create additional difficulties and huge effective costs for the economies of the region. Therefore, we call for the establishment of appropriate mechanisms and instruments for liquidity provision by the European Union to peripheral euro area countries. I believe that the financial integration makes this common defence more urgent, through the right understanding of the common fate of our trade partner economies. I take the opportunity, given the presence of many central bank officials from the region, to call for an en bloc coordinated position in this regard. The experience of the latest crisis showed that the countries which had more space to react, in the form of healthier fiscal balances or the financial system, and in the form of more reliable public institutions, were able to cope better with the consequences of the crisis. This lesson should not be neglected. Among other things, it implies timely measures and, through counter-cyclical policies, establishment of the necessary space to buffer potential shocks. Likewise, it implies ongoing efforts by macro and micro-prudential policies to minimise financial misbalances across all the sectors of the economy and the financial market. These policies, which are often known as “leaning against the wind”, have been and will continue to be part in the logics behind the actions of the Bank of Albania. Concluding, I would like to assure you that the Bank of Albania will make maximum efforts to continue its success story into the third decade of its life.