Indeed, remittance flows are increasingly important relative to other foreign exchange-earning activities, representing around 14 percent of GDP, 70 percent of exports, and 33 percent of imports. Italy is the major migration destination country for Albanians. On the other hand, Albania is the number one recipient country in terms of remittance flows from Italy to other countries. Therefore, remittance services from Italy to Albania have become a topic of great interest. The Italian-Albanian remittance corridor is a relevant case to examine the effects of remittances on local communities and to discuss the ways of making these flows more efficient and less costly. A recent survey of the Bank of Albania shows that remittances have had positive impact across all Albanian regions. The influence is slightly higher in less developed regions alleviating to some extent income disparities. Remittances have become a critical source of income for households, reaching 33 percent of disposable income of an average family recipient and almost 40 percent in rural areas. The recipients of remittances are from all social groups, including middle income class (60 percent) as well as the low income class (27 percent). Our estimates show that the level and severity of poverty are significantly reduced among those households receiving remittances, with greater influence on severity rather than the level of poverty. Remittances are mostly used for imported consumer goods, services, and for the purchase or construction of houses. A small share is saved or invested in businesses, mainly in agricultural sector.

The task is to diversify a large foreign currency portfolio according to the criteria of liquidity, security and return. Even in these extreme circumstances, the SNB’s investment policy and process have proved resilient. The investment skills we have developed over the past 15 years, together with our flexibility regarding investment categories allow for the smooth absorption even of large inflows from foreign exchange purchases. The principles upon which our investment policy is based have proved their worth. The idea of a sovereign wealth fund for better management of the SNB’s currency reserves has attracted some public interest. However, a sovereign wealth fund would not facilitate monetary policy with regard to the enforcement of the minimum exchange rate. Moreover, advocates of a sovereign wealth fund often have unrealistically high expectations, not least as regards returns. But the most important point is that the current size and composition of the central bank balance sheet are a direct reflection of monetary policy. The SNB’s investment requirements are derived directly from money creation and not from other revenue sources. If limitations were placed on the SNB balance sheet, its room for manoeuvre in the monetary policy domain would be restricted. Due to the accumulation of currency reserves that have resulted from monetary policy measures, there are substantial risks weighing on the SNB balance sheet. Consequently, fluctuations in value may be much greater in future than they have been in the past. In addition, the relationship between equity and currency reserves has worsened.