the institution ’ s capacity to cope with the business risks. all these elements provide evidence for the need that the banks ’ governing structures follow practices that allow the institution itself to meet the expected liquidity needs independently, however, having options which improve their capacity to generate liquidity in urgent cases. you must re - evaluate the securities ’ portfolio quality, in particular that in foreign currency, in order to attain the optimum characteristics of safety and tradability. in addition, the portfolio of placements in foreign currency in the form of deposits or related products with international financial institutions should have as its main objective the safety of the investment and the adequacy of maturity term. in a broader context, you should reassess the adequacy of certain indicators ’ level in terms of differences in maturity terms and the type of currency of assets and liabilities. assets ’ quality, which is mainly affected by the quality of loan portfolio, remains a constant risk to the banking business in general. the reduced quality of assets does not only impair the institution ’ s income, but also harms its liquidity position. in the case of the albanian banking sector, the loan portfolio quality has been decreasing, although at gradual rates, and the situation is presented as entirely manageable. the rapid growth of credit and the challenges certain sectors of the economy that have been lent significantly may be faced with, are factors that will continue to exert pressure on the loan quality in the near future. hence, it is crucial for you to implement a policy of rapid detection of non - performing loans and promptly create reserve funds. it is for this reason that the bank of albania will increase the frequency of controls and the efficiency in monitoring and checking this process. the bank of albania, through its supervision department, has prudently and constantly monitored the developments ’ dynamics in the banking sector, part of which are also the recent developments related to interest rates on market products. we consider these interest rates as aggressive, providing their impact on the profit margin and representing a potential risk to the structure of balance sheet. as you are aware, we have required from you information related to the strategy and procedures followed by your bank with respect to the application of these terms and interest rates, the purpose and grounding basis for the decision - making process and the structures involved. it is essential for the bank of albania that any decision made is a product of deep and comprehensive analyses from the most junior expert to the decision - making structures, placing

egelhof for his assistance in the preparation of these remarks, adam biesenbach and romen mookerjee for their assistance with data, and colleagues in the federal reserve system for numerous insightful comments and suggestions. 2 additional information about suerf is available on its website, www. suerf. org /. 3 the amortization of premiums on portfolio securities holdings results in downward pressure on the size of the 13 / 15 bis central bankers'speeches federal reserve ’ s balance sheet over time, even absent a reduction in reinvestments associated with increasing redemption caps. specifically, the balance sheet includes securities holdings at face value and records unamortized premiums ( discounts ) as a separate asset ( negative asset ). as the premium ( discount ) security amortizes to its par value — with an associated offsetting reduction ( increase ) in remittances to the u. s. treasury — the size of the balance sheet declines ( increases ). 4 the maturity structure of the balance sheet was only loosely incorporated into the purchase plan. purchases of treasury securities were targeted at maturity sectors ; within each sector, specific issues were selected for purchase using a relative - value approach based on a spline fitted to market prices. sack, implementing the federal reserve ’ s asset purchase program, february 9, 2011. treasury securities acquired through reinvestment are allocated in proportion to issuance. agency mbs purchases are distributed across instruments roughly in proportion to anticipated gross issuance of those securities at the time. potter, the implementation of current asset purchases, march 27, 2013. 5 early fomc discussions of balance sheet normalization, then referred to as “ exit strategy, ” were predicated on an intention to return to, as put in the january 28, 2009 meeting transcript, “ a more normal framework for conducting monetary policy, ” which meant a return to an asset and liability structure closely resembling that which prevailed before the financial crisis. normalization - related matters were discussed in the minutes to most of the fomc ’ s 2009 meetings. in a january 2009 speech, the crisis and the policy response, chairman bernanke provided extensive detail on the eventual normalization strategy, including his expectation that the balance sheet would be reduced “ to the extent necessary at the appropriate time. ” 6 see potter, money markets at a crossroads : policy implementation at a time of structural change, april 5, 2017, for an assessment of the efficacy of these tools. 7 currency