Asset quality in the banking sector have continued to improve, with the net impaired financing ratio as at end September 2010 at 2% while the loan loss coverage ratio is at 90%. The more favourable economic conditions and the positive outlook have also resulted in strong profits being recorded by the industry. While these developments affirm the underlying strength of the financial sector, there needs to be greater vigilance on potential risks to the system. The first relates to the rising level of household sector indebtedness. Debt accumulation by the household sector has expanded rapidly, during the three year period leading up to 2009. Increasing at an annual rate of 9.3%, household debts now account for 73% of GDP. While the household balance sheets at the present remain healthy, household debt above prudent and sustainable levels would become an area of concern. In addition, history has shown that excessive risk-taking practices by banking institutions that involve indiscriminate lending practices with inadequate regard to the aggregate debt obligations of borrowers would contribute to financial instability with its consequences not only on the financial system but also on the economy. This recent global financial crisis has shown that such irresponsible lending practices contributed to the build up of excessive leverage among households, and that this in turn sowed the seeds for negative consequences on both the financial system and real economy. Banks and insurers are, therefore, expected to observe prudent underwriting standards and responsible behaviours in their lending activities.

Elisabeta Gjoni: Modernisation of retail payment systems in Albania Opening address by Ms Elisabeta Gjoni, First Deputy Governor of the Bank of Albania, at the Conference on the "Modernisation of retail payment systems in Albania", Tirana, 21 June 2018. * * * Good morning! It is my great pleasure to welcome you to the Conference on the “Modernisation of retail payment systems in Albania”. The Bank of Albania is honoured to have today representatives from the European Central Bank, the World Bank, and central banks of Italy, Kosovo, and Serbia. Also, I would like to welcome the operators and providers of well-known payment services in international markets, representatives of the domestic banking and payments industry, public authorities and, the Governor of the Bank of Albania and the Deputy Prime Minister of Albania, Mrs Senida Mesi. This conference takes place only one day after the meeting of the National Payment System Committee (NPSC). The members of this Committee undertook important commitments related to the development of payment systems and financial inclusion. The approval of the National Retail Payments Strategy (2018–2023) is the main product of this meeting. The retail payments system is a vital component of: financial markets; the overall economy; and every citizen as the end user. In this framework, the Bank of Albania prioritises the modernisation of retail payments system. Banks have provided a significant contribution for the development of payments, so far. They have invested in: many new technological platforms; modern payment instruments; cards by the renowned international brands.