I would agree that there are certainly some common features, and indeed we would usually review as part of our own work the work done by the audit department on identifying areas of potential risk and control problems. Similarly, external auditors’ observations and recommendations are often very useful to us in coming to a judgement on the effectiveness of an institution’s internal controls. However, to supervise an institution effectively a supervisor needs, in my opinion, a means of independently verifying that internal controls are sound and that all substantive risks have been identified and considered. For this reason, our ongoing dialogue with institutions, and our periodic on-site examinations of institutions’ activities, are invaluable. I believe this oversight can also be beneficial in a practical way to the institution itself. For example, we may have insights that the institution does not. We may be able to give an institution feedback on how it compares vis-à-vis its peers in similar areas and to indicate respects in which, from our experience, its controls and risk management processes are falling behind the game. I would not want to overplay this “management consultant” type role, but I think it can be beneficial, perhaps especially to the smaller, less sophisticated financial institutions. Of course, this presupposes that we have the necessary expertise to offer useful advice. This is a constant challenge in today’s environment of rapid technological change and product innovation.

Such reforms have ripple effects that go beyond economic benefit of a long run stable growth and financial stability. I believe that positive spillovers will be materialized in the South East European region’s prosperity and its economic and political integration in European Union. The Bank of Albania has been a constant generator and supporter of reforms both institutionally and as the provider of stable prices, sound macroeconomic conditions and financial stability. It makes an undeniable fact that financial integration which we are experiencing will be to the forefront of European Union integration process. It will ease the challenges and speed up the process of European integration which Albanians have embraced by wide popular consent. Like in many other transition economies banking reforms in Albania were implemented as an integral part of the structural reforms undertaken to transform the Albanian economy in a market oriented economy. Continuous improvement, along with approval and implementation of new banking legislation and supervisory regulation; liquidation and privatization process of the state owned banks; and foreign ownership; have change banking and financial markets. Foreign banks have been an important push factor toward increasing efficiency, number, quality, and coverage of financial intermediation. New entries, mergers and acquisitions are recently altering the market structure in both asset and liabilities. Reforms that brought big European players and their capital in the market, have further increased confidence in our economy and in the region as whole. However, the presence of foreign banks does not replace the need for legal and institutional framework.