Dear ladies and gentlemen, The banking sector plays a key role with regard to the administration of the savings of the Albanian households, intermediation and allocation of funds, and expansion of financing instruments, risk management and payments. The level of accomplishment for these functions will be mutually related to the pace of Albania’s development in the long-term horizon. From this perspective, let me identify four primary challenges for the sector: First, the banking sector should accomplish better its intermediation role in the economy. The improvement of soundness indicators, the reduction of credit risk and the consolidation of the banking sector should pave the way for a more active approach of banks to lending. The financial capacity of the country should be reflected better in lending to Albanian enterprises and households. Second, the banking sector should pay more attention to the efficient allocation of funds, toward more productive and high-potential sectors in the long term. The banking system, in general, is matured enough to discern between good and bad borrowers, thus minimising problems arising from moral hazard and information asymmetry. Yet, the constant financing and the reallocation of capital provide the basis for the development and restructuring of the economy. In this regard, banks would need to identify profitable sectors, which may guarantee added value for the economy and employment, and support them with funds. Third, in parallel to the improvement in the allocation of funds, more efforts are needed for the financial inclusion of the population.

Sukuk has drawn strong interests as an attractive source of funding and a new asset class. UK, Hong Kong, Luxembourg and South Africa issued sovereign sukuk last year. With this leadership taken by the British Government, UK became the first non-Muslim country to issue sovereign sukuk of GBP200 million that attracted strong demand of more than 10 times. Hong Kong issued the second sovereign sukuk in 2015 following its successful inaugural issuance. The sovereign issuances are hoped to pave the way for corporate sukuk issuances particularly from these jurisdictions. Another landmark transaction is the syndicated Islamic financing facilities of GBP467 million for the Battersea Power Station Phase 3 project in London. The involvement of our Malaysian players in some of these global transactions has encouraged cross-border business transactions and enhanced collaboration with players in other jurisdictions. Despite the above, sukuk recorded a lower amount of new issuances of USD40 billion during the first half of 2015 due to a slowdown in the current global financial markets and still-low oil prices. Malaysia remained the key jurisdiction for sukuk origination with issuances of USD19.8 billion or 50% of total market share. Malaysia has evolved into a multicurrency sukuk issuance marketplace with issuances in US Dollar, Chinese Renminbi, Singapore Dollar and Japanese Yen. Our banks, Islamic fund management companies and professional service providers, some of whom are with us today, have global capabilities and expertise in advising and managing cross-border financing and investments.