In simpler terms, consumer spending of Albanian households, private sector investments, public spending and external demand for Albanian goods and services do not manage to fully use the productive capacities of the economy. The low aggregate demand leads to low increase in employment, wages and production costs, and hence to low inflation rates. Also, it poses difficulties for many businesses and is translated into increase in nonperforming loans in the banking system. In this context, undoubtedly, promoting and stimulating the economy should be a priority of the macroeconomic policies. The Bank of Albania deems that besides the classic instruments of the economic stimulus, monetary and fiscal policies, attention should be paid to smoothing uncertainties in the economy. I will briefly address three of these elements. First, in our opinion, the fiscal policy has limited space for economic stimulus. The rapidly expanding public debt increases the vulnerability of the Albanian economy and may make the fiscal stimulus counterproductive. We deem that the fiscal policy should focus on monitoring the public debt in the medium and long term. The Bank of Albania sticks to the opinion that the public finance consolidation should anchor to an effective and transparent fiscal rule. This rule would increase the short-term flexibility of public finances and reduce the fiscal adjustment cost. Second, the overall economic and financial stability is a prerequisite for a rapid economic growth. The monetary policy has been and will remain oriented toward meeting our inflation target.

11  Congress granted this authority to the Federal Reserve in the Financial Services Regulatory Relief Act of 2006, with an October 2011 effective date, but accelerated its implementation to October 2008 as part of the legislative response to the financial crisis. A similar tool is critical in the implementation regime of most advanced economy central banks. 12  The FOMC also considered an arrangement under which depository institutions could pledge funds held in a segregated account at the Federal Reserve as collateral in borrowing transactions with private creditors. This approach aimed to reduce credit-related barriers to depository institutions’ borrowing funds in money markets and thereby intensify competition among borrowers. The FOMC decided that these accounts involved operational, regulatory, and policy issues that would have been difficult to resolve in a timely fashion, and it shelved further work. See the minutes to the FOMC’s December 2014 meeting. 13  This approach was discussed in detail in the FOMC’s June 2011 Exit Strategy Principles. 14  The Federal Reserve continues to test its Term Deposit Facility (TDF). In late 2014 and early 2015, the Federal Reserve conducted rounds of testing of the TDF that on two occasions resulted in cumulative take-up of more than $ billion. These operations reportedly had no significant impact on conditions in money markets, suggesting that TDF operations would have to be significantly larger to put upward pressure on rates. 15  This approach has been used heavily, for example, by central banks that have large foreign exchange reserves.