The definition of price stability is therefore an essential feature of our monetary framework. Originally, when the euro was created, price stability was defined as a “less than 2%” increase in the overall price index. That would theoretically allow for zero or even negative inflation. The definition was described as “asymmetric,” meaning that the Eurosystem would react to excess inflation but would be indifferent to low inflation or even deflation. But that was never the intention. In 2003 the definition was adjusted in order to eliminate any ambiguity. Price stability is now defined as “less than but close to 2%.” The current definition is therefore fully symmetric. It makes it clear that the central bank is equally concerned by inflation that is too low or too high. This is not only a question of semantics. Central banks’ perceived objectives determine expectations and the behavior of private agents. If a central bank is seen as equally  BIS central bankers’ speeches  1  intolerant of both high and low inflation, the economy will more easily stabilize within the acceptable inflation range. Stability of inflation expectations has improved the capacity of euro-area economies to absorb the post-Lehman shock: While inflation became negative for a few months in 2009, expectations did not change and deflation was never a threat. This episode illustrates the credibility achieved by the Eurosystem in approaching price stability in a symmetric fashion. Together with the definition of price stability, the “two pillars” approach is another important feature of the Eurosystem’s framework.

Dear ladies and gentlemen, The new agreement, similarly to the previous one, enables the Bank of Albania to be part of a rich, deep and diverse programme of bilateral assistance and capacity building for central banks. Through qualifications and capacity building, the goal of the cooperation agreement is to perfect the analysis, the decision-making and, consequently, the policy-making processes at the Bank of Albania. I think that we have already established firm foundations that guarantee an even stronger partnership for the second phase. Expected outcomes from the implementation of the second phase include: monetary policy decision making sustained by improved forecasting capacities, macro-prudential policy formulated based on a larger body of knowledge about various risks; and research further enriched with the best research methodologies and practices. These goals form the core of our medium-term strategy. The Bank of Albania aims to increase the impact of research results on decision-making, extend research to other departments, and adopt highest standards on ethics and rigorous research, which renders it one of the priorities of the cooperation. Many of the current developments and challenges in certain countries or regions may appear as distant and alien to us, but globalisation and economic integration disregards borders and their effect and impact may spill over into our economy. The problems that persist from the financial crisis, the continuation of quantitative easing programmes and the new normal for the monetary policy affect the functioning of the central bank.