Gent Sejko: Aligning monetary policy with financial stability - their objectives, responses and interaction in times of uncertainty Welcome address by Mr Gent Sejko, Governor of the Bank of Albania, at the Annual Conference 2016 "Aligning monetary policy with financial stability - their objectives, responses and interaction in times of uncertainty", Tirana, 27 October 2016. * * *  Your Excellency Prime Minister, Your Excellencies Ambassadors, Honourable Members of the Government, Ladies and Gentlemen, Dear Mr Anastasakis, Dear guests, It’s my great pleasure to welcome you to the Annual Conference of the Bank of Albania 2016. The conference is organised in cooperation with the European Studies Centre of St Antony’s College, University of Oxford. This year’s conference will focus on two main topics that prevail in the analyses and debates among policymakers, academia and professionals circles: First, possible implications from the Brexit; and Second, determining the modalities for coordinating the monetary policy with the macroprudential policy and measures, in the new reality we are facing. Together with guests from European and regional central banks, international institutions and academia, we will be discussing about the current challenges, and appropriate policies and instruments central banks need to employ. I am confident the proceedings of this Conference will produce more clarity for all participants, policy makers and private sector representatives alike. Let me elaborate in greater details the perspective of the Bank of Albania on these two topics. - Initially, I would like to present the backdrop of the current economic and financial situation.

Central bank experts have adjusted the figures based on the assumption that actual demand accounts should see a growth similar to that of currency in circulation, as it was the case in previous years. Hence, it would appear that quasi-money rose over 80% December 2004 through August 2008 versus only 40% as indicated by statistical data. In other words, both household and corporate savings in domestic currency expanded at a pace much faster than that of time deposits. These statistics led the media to comment on a would-be stalemate in RON-denominated savings. The NBR specialists will make sure these developments are explained in further detail. This is how a fiscal policy slippage entails both a contraction in budget revenues and potential errors in assessing monetary developments. Given the heightened turbulences on the international financial markets in the last few weeks and the fact that the NBR is vigilantly monitoring these developments, I believe we should refer to their potential impact on the domestic financial system and on the Romanian economy as a whole. The Romanian banking sector is still affected mainly by increased external financing costs. The limited impact is due to domestic financial environment characteristics, as well as to the prudential monetary policy and financial stability strengthening measures adopted by the central bank over the years. Let me highlight the most important of these measures. First and foremost, credit institutions in Romania do not have exposures to subprime instruments, which lie at the root of the turmoil.