Economic growth has been financed, to a significant extent, by foreign resources, in the form of foreign-currency borrowing by the public sector, financial sector, businesses and households. A substantial share of the bank’s liabilities and of the loan portfolio is in foreign currency. Foreign-currency lending has been dominant and preferable by parties. This was due to a combination of factors, such as positive exchange rate trend, lower interest rates and good opportunities of the banking sector to fund these loans in the  BIS central bankers’ speeches  1  wholesale markets. Foreign-currency lending to the private sector and households were used to a considerable extent for consumption. Foreign investments in the tradable goods sectors, which would contribute positively to trade balance, were less than those in the non-tradable goods sectors. This is the case of Albania, Bosnia-Herzegovina or Serbia. It is estimated that in terms of the stock of foreign investments, at end-2008, the share of investments in the tradable goods sector ranged from 15% in Albania to 35% in Serbia. Therefore, in the pre-crisis period, some of the countries posted steady and even upward trade balance deficits. Second, notwithstanding the efforts to develop the financial market, the banking sector continued to dominate the financial system of the countries in our region. This is a phenomenon of developing economies, which shows the great dependence of economic development on the banking sector condition. The banking sector in some countries in the region is mostly owned by European banking groups.

In theoretical and scientific debate round-tables, efforts have been focused on identifying causes and taking measures to prevent recurrence of such events in the future. A new financial infrastructure is being designed. This is the context of this annual meeting, on whose focus is the identification of post-crisis challenges our region is faced with. Allow me to briefly address two or three of my personal opinions about this situation. Before the impact of international financial crisis, all countries in the region were involved in important reforms aimed at increasing the economic growth. At this stage, through necessary legal improvements and prudent development policies, there took place the opening of economies and the development of trade, increase in domestic and foreign investments, overall liberalization of markets and promotion of financial market development, to provide more qualitative and sustainable financial services to businesses and households. From the macroeconomic viewpoint, fiscal policies in the region are aimed at fiscal consolidation through revenue growth and greater investment-oriented public spending. Monetary policies, thanks to different exchange rate regimes, have generally kept consumer price rise on track and interest rates have followed a downward trend. However, the global financial crisis has affected the countries in our region, due to some weaknesses that were present during the growth phase. First, the closeness of our countries and the concentration of trade with the European Union area, as well as migratory movements, have brought about a large use of the euro in the regional economies.