In this regard, the Council has paid particular attention to this process, building on the 1/8  BIS central bankers' speeches  structures and processes that had been established in 2015. I would like to update you briefly on their progress insofar and introduce you to new developments for 2016. Established in 2015, the Audit Committee conducted its activity independently in 2016. During the period, the Committee met seven times, exercising its functions as the supervisor and coordinator of internal and external audit functions, with a view to enhancing their efficiency. In accordance with the Internal Audit Policy, the Council adopted for the first time the annual plan of activities of the Inspector General and of the Internal Audit Department. The Audit Committee, and in turn, the Supervisory Council have been informed regularly on audit findings and recommendations by the Internal Audit Department, which provide additional guarantee on the effectiveness and quality of the internal audit systems. In July, the Supervisory Council adopted for the first time the Operational Risk Management Policy at the Bank of Albania. The document sets out the objectives, resources and key risk assessment principles, reporting lines and responsibilities of the relevant units. On these grounds, in August, rules were adopted on the organisation and functioning of the Operational Risk Management Unit, which is now operational. Also, in July, the Council approved the new budget regulation, which disciplines budget drafting, and planning and control of capital expenditure. In December, the Supervisory Council adopted the annual budget for 2017.

To facilitate banks’ access to borrowing from Norges Bank during the period of financial turbulence, collateral requirements for loans were temporarily eased. In October 2009, it was announced that the temporary rules for collateral requirements would be changed. Acceptance of new securities eligible under the temporary rules was discontinued in October. Securities already approved under the temporary rules would be eligible as collateral until maturity, or at the latest until 15 February 2012. Changes in the so-called bank quota were also announced. Under the current rules, up to 35 per cent of a bank’s borrowing facility can be based on collateral in bonds issued by other Norwegian banks. Debt instruments issued by foreign banks will be included in the bank quota as from 1 December 2010. Securities issued by banks will no longer be eligible as collateral for loans as from 15 February 2012. Covered bonds will still be eligible as collateral, including, until further notice, bonds to which no credit rating has been assigned and bonds issued by a bank’s own mortgage company. This is expected to contribute to the development of the Norwegian covered bond market. The housing market – a source of disturbances in the economy Banks have had strong incentives to extend credit for house purchases. Even during the banking crisis around 1990, Norwegian banks’ losses on residential mortgages were low. This is reflected in the low risk weights for residential mortgages in banks’ risk models. For an individual bank, residential mortgages are low-risk loans.