Thus, the system should monitor daily the performance of liabilities of a bank, in order to create and maintain the required liquid assets for these liabilities.   Factor expected developments in capital requirements. Injection of additional capital by shareholders should consider the establishment of a security “zone” in the capital value, against unexpected developments. Therefore, the banks should cautiously interpret the requests to distribute dividends. Credit quality remains the main concern of the banking sector. The increase in nonperforming loans intensifies the banking stress and reduces the contribution to financial intermediation and economic growth. The Bank of Albania has monitored this situation closely, focusing on:   Accurate identification of the problem, through inspection and verification of procedures for assessing the credit quality and category;    Relevant contingency funds provided at the required amount and time;    Encouragement to banks to address the issue by taking strict initiatives for collateral execution. In our view, this is the only way to identify and tackle the problem on time, prevent its spillover and reduce uncertainties for the future. The banking industry has intensified its requests for the revision of the supervisory regulatory framework, so as to soften it in relation to the handling of non-performing loans. The Bank of Albania is open to consider valid and realistic proposals by the banking industry, as long as they do not weaken the capacity of the banking sector in a situation with unclear developments.

Looking ahead, according to the Bank of Albania, the main risks to economic stability pertain to economic growth. A number of signals from the real and financial sectors show that the contraction of consumers’ balance sheets and slowdown of investments, used so far by economic agents  2  BIS central bankers’ speeches  as buffers to the crisis, may imperil the mid-term prospect of economic growth. The propensity to save and defer investments may affect the competitive advantages and growth potential of our economy. Deleveraging, mostly driven by regulatory requirements that are not related to the performance of the economy, may undermine the existing financing channels, which have been so far an important component for growth. According to the Bank of Albania, the current situation requires higher attention and courage by all economic agents to make the right decisions for development and in response to the challenges arising from the external environment. In a more general setting, the Bank of Albania believes that implementation of right macroeconomic policies by harmonising the monetary and fiscal policies, is a prerequisite for the country’s sustainable and long-term development. They should have two main components: support growth and sustainable development for the country’s economy and boost long-term development through encouraging structural reforms. In Bank of Albania’s view, our economy is flexible and the infrastructure of core services, financial services and regulatory framework is constantly improving. The labour force is competitive, in terms of cost, and increasingly qualified.