Moreover, in view of the improved international liquidity conditions and the increase in foreign exchange liquidity of the banking system, our Bank has terminated its intermediary role in the Foreign Exchange Deposit Market as of October 15, 2010. In addition, the maturity of the foreign exchange deposits borrowed within the pre-determined borrowing limits by banks from the CBRT was reduced to one week, as was the case before October 2008. Distinguished Guests, 43. The quantitative easing adopted in the last quarter of 2010 by some major central banks and the consequent boost in capital flows to emerging markets have necessitated significant changes to our monetary policy strategy. Short-term capital inflows feeding the divergence between domestic and external demand caused current account deficit to widen rapidly, thus necessitating macroprudential measures. Hence, we jointly use liquidity management facilities and reserve requirements as well as policy rates in order to achieve price stability and financial stability. 14  BIS central bankers’ speeches  44. In line with the new policy design, the TL required reserve ratio was raised by 0.50 points each in September and November to 6 percent. Additionally, in order to more effectively use the required reserve ratio as a tool to contain macroeconomic and financial risks, interest payments on TL reserve requirements was terminated in September. 45. Due to the accelerated capital inflows, our Bank reduced its overnight borrowing rate from 5.75 percent to 1.50 percent in November, and increased the lending rate by 0.25 points to 9 percent. Late liquidity window rates were accordingly revised.

Before I elaborate on this topic, let me emphasise two key moments. The first moment pertains to a misunderstanding we often encounter in the public opinion, even within the professional discourse, that is the Albanian banking sector is not lending. This is not true. Our data show that, excluding the accounting effect of the exchange rate and the write offs, the portfolio of bank loans has recorded 6% annual growth in the last year. Moreover, the pace of growth has shown an improving trend, in line with the overall context of the performance of the economy. In parallel, the expansion of the bank loan portfolio has shown a more balanced composition in terms of both the currency structure and the destination of funds. I would also like to underline that the term to maturity of the bank loans portfolio is short, which means that it is renovated frequently. Thus, regardless of the pace of change in the size of the portfolio, the Albanian banking sector continues to lend. To illustrate my point, only in 2018, the banking sector has granted new loans amounting to around EUR 1.1 billion (equivalent) to fund business investments, house purchase and consumption. The second moment pertains to the responsibility and the diligence of the banking sector vis-àvis lending. As the administrator of public savings, responsibility and due diligence in lending are non-negotiable conditions. Measures undertaken to bolster the short and medium-term development of Albania should not run against its financial stability in the long term.