Since higher exchange rate volatility relative to inflation volatility decrease the hedging benefits of foreign currency assets 11 this monetary policy framework can be said to help the process of “liraization”, a term that was suggested by Dr. Leiderman at the conference on “Inflation Targeting: Performance and Challenges” hold by the Central Bank of Turkey at the beginning of this year. 9  Bahmani-Oskooee, M.; Domaç, I.; “On the Link Between Dollarization and Inflation: Evidence from Turkey”; The Eighth Dubrovnik Conference on Monetary Policy and Currency Substitution in Emerging Markets; Dubrovnik; June 27-29, 2002. 10  Leiderman, L; R. Maino and E. Parrado (2006); “Inflation Targeting in Dollarized Economies”; IMF Working Paper, WP/06/157. 11  Bahmani-Oskooee, M.; Domaç, I.; “On the Link Between Dollarization and Inflation: Evidence from Turkey”; The Eighth Dubrovnik Conference on Monetary Policy and Currency Substitution in Emerging Markets; Dubrovnik; June 27-29, 2002. 4  BIS Review 124/2006  Here, I want to make a point on the floating exchange rates. The floating exchange rate regime has transferred the exchange rate risk to the market and made economic agents to perceive and understand the importance of risk management and using hedging instruments and derivatives market better. In this context, as we have mentioned in several platforms, the opening of the Turkish Derivatives Exchange Market in February 2005 has been an important step. Accordingly, promoting the use of this Market by a wider range and the development of the hedging instruments further are very important for both the financial stability and dedollarization.

All these initiatives, coordinated with other policies, have proven effective. Inflation remains subdued and in check, inflationary expectations are anchored, macroeconomic environment is steady and financial stability is consolidated. Looking ahead, the Bank of Albania holds that the Albanian economy will continue to face the above-cited concerns over 2013 and beyond. Although improving, economic activity is expected to remain below its potential, followed by low inflationary pressures, creating premises for maintaining stimulating monetary conditions in the future. Likewise, our  BIS central bankers’ speeches  1  projections suggest that external balances of the economy are expected to improve. On the other hand, slow economic growth rates may generate pressures on debt stability indicators, unless they are identified and taken into consideration in fiscal policy decisions. In Bank of Albania’s view, growth rate recovery will require combining the cyclical stimulus of the economy with structural measures that expand the growth potential. Regarding the cyclical aspect, the Bank of Albania holds that macroeconomic policies are rightfully stimulating. In the absence of space, fiscal policy should continue to be oriented towards long-term stability of debt indicators. The monetary stimulus is expected to be transmitted more completely in the upcoming period. We continue to underline our message that businesses and consumers should have a more realistic approach on sound perspectives for the country’s development as well as revise up their consumption and investment plans.