In March, the Bank of Albania made several amendments to regulations on the operation of both payment systems, aiming to promote the use of payment service and reduce the use of cash. Also, in fall 2011, the Bank of Albania submitted to the Ministry of Finance a draft-law “On Payment Systems”, which is in line with the basic principles of EU directives. Also, the Bank of Albania is preparing draft-regulations necessary for implementing the provisions provided under this draft-law.   Improving statistics  In 2011, the Bank of Albania worked intensively to identify new requirements on statistical production structure, in line with EU requirements for candidate and member countries. Constructing a reporting model, reviewing and improving the reporting forms, and applying best practices for publication of statistics were on the focus of our work. Also, the Bank of Albania has started the project for “Regulatory Reporting Automation”, which aims to establish an electronic reporting system for institutions that report data to the Bank of Albania. This electronic reporting system would alleviate the reporting burden of institutions, shorten the reporting time, automate process control, generate statistical tables and significantly improve the quantity and quality of statistics produced by the Bank of Albania. BIS central bankers’ speeches  7    Improving research capacity  In recent years, the Bank of Albania has paid special attention to increasing the level of study and research in the institution by investing significantly in human and technical resources.

The sluggish consumption and investments were reflected in a low demand for loans and mainly oriented towards shorter-term maturities. On the other hand, higher prudence by banks in crediting was reflected in tighter terms of credit supply. Financial markets were generally stable and evidenced improved liquidity conditions and controlled risk premia. Money market interest rates pursued a downward trajectory, due to easing policy of the Bank of Albania and satisfactory liquidity levels. While costs for the private sector credit were lower than a year earlier, the sluggish performance of the economy and uncertainties about its outlook made the trend appear more moderate in interest rates applied on lending to this sector. BIS central bankers’ speeches  3  Pressures on foreign exchange market were low and the exchange rate of the national currency against the major foreign currencies was stable, being a supporting factor to controlling inflationary pressures at home and increasing the certainty in foreign trade relations. 2. Inflation and monetary policy  In 2011, average annual consumer price inflation was 3.5%, remaining close to the previous year’s average inflation rate. The performance of inflation was featured by a high volatility in the past year. Over the first and second quarters, annual inflation rate approached the upper limit of the targeted band, mainly driven by rapid and sharp price rise for food and primary commodities in international markets. These pressures were short-term and soon moderated; over the second half of the year, inflation started to fall gradually, marking 1.7% in December.