At this Conference, where I had the honour and pleasure to address, I underlined the valuable contribution of the banking industry to Albania’s development over the past two decades and identified some challenges and opportunities that may lie ahead for all of us, together, in the future. In our vision, these challenges and opportunities are related to the degree and quality of intermediation of funds in the economy – in other words, the volume and structure of credit, and the expansion of the range of financial products – to boost financial inclusion of the population and innovative technological development in the economy. The premises of this meeting remain consistent with what I said earlier. The Albanian banking sector has developed rapidly over the past two decades. Now, this sector administers around 2.4 million bank accounts of individuals, and provides credit to around 327,000 economic units, of which around 307,000 are households and around 19,000 are small or large enterprises; the rest are other public or private entities. In macroeconomic terms, the volume of financial savings administered by the banking sector accounts for around 70% of the GDP, whereas the volume of credit accounts for around 35% of the GDP. Moreover, in the past two decades, the banking sector has expanded its operational network across the territory of the country and has introduced bank products and payment instruments in line with global developments in this sector. In brief, the banking industry has contributed to the development of the Albanian economy by encouraging savings and generating credit.

In this context, the banking industry now has a more adequate legal and regulatory framework on protecting the interests of the creditor, repossessing collateral and executing it, and a more transparent environment for assessing the risk of individual borrowers. On this basis, the Bank of Albania deems that the banking sector, should: Pay additional attention to crediting as a commitment that generates mutual benefits both for it and the Albanian economy; Empower internal structures and its analytical and managerial capacities in terms of crediting; Ensure prioritized implementation of outstanding commitments under the plan of measures for reducing non-performing loans; and, Be more vocal and more transparent in identifying obstacles or deficiencies it finds in the crediting environment, both in legal and in regulatory aspects. These recommendations should not be addressed separately from the second challenge. 2. Efficient allocation of bank loans as a precondition for sustainable and long-term development Increased attention to crediting does not imply merely increased attention to the volume of credit, but also additional attention to its quality. These two aspects are complementary and do not contradict each other in the long run. The history of credit in transition economies, including Albania, features some problematic elements which we need to avoid in the future. First, credit has been notably concentrated in non-tradable goods and services, such as residential buildings and services, which are oriented solely – or primarily – toward the domestic market.