Before the crisis, the National Bank had repeatedly drawn attention to the high leverage of the big banks and warned that their ability to absorb losses was not adequate. These caveats did not result in any voluntary change in behaviour. For this reason, it is essential that our set of preventative instruments for financial stability be improved in three areas; namely, improved access to information, closer involvement in regulatory procedures with regard to financial stability issues, and direct macroprudential decision-making powers. I would now like to take a closer look at these. First, it is crucial that we have all the necessary information quickly to hand in order to identify the build-up of risks in the financial system at an early stage. While the SNB’s statutory authority to compile statistical data is both necessary and helpful, the latest crisis clearly demonstrated that the National Bank must be able to request additional information. With this I mean, for example, quantitative, non-standardised data on banks’ risk exposure. BIS Review 173/2010  1  Unlike FINMA, Switzerland’s financial market supervisory authority, the SNB’s stance is primarily a macroeconomic or systemic one. This is why we must be able to act independently in certain situations when gathering information. At the same time, we also want to keep our access to information to an absolute minimum and avoid a duplication of activities with FINMA. Second, clarification of the SNB’s participation rights and obligations is needed in the area of regulation essential for financial stability.

From the macroeconomic point of view, the simultaneous action of weak inflationary pressures by the domestic economy, downward imported inflation and anchored inflation expectations led to low inflation rates. The domestic economic and monetary environment has put downward pressures on prices. Owing to the fragile aggregate demand, the negative output gap persisted, despite the growth recovery in the fourth quarter of 2013. Pressures  BIS central bankers’ speeches  1  from the labour market were subdued because of the rise in unemployment rate during 2013 and the moderate rise in wages. These developments led to a low increase of production cost and controlled businesses’ profit margins. The weak domestic demand narrowed the room for businesses to pass the increase in excise duty on the final prices. Also, the imported inflation has been downward, reflecting the low inflation in our trading partners and the stability of the exchange rate. Economic and financial agents show anchored inflation expectations, with no considerable deviation from either the objective of the Bank of Albania or the average historical behaviour. Analysing the economic performance, INSTAT data show that the gross domestic product increased by 1.1% during the fourth quarter of 2013, after a decrease by 2.5% in the third quarter of 2013. This increase was broadly determined by positive performance of domestic private demand, while the contribution of the public sector and net exports was negative. From the sectorial point of view, economic growth was generated by the positive performance of production, whereas services declined.