entire financial system? are individual market participants very large – that is to say, too big to fail – or too closely interlinked with other market actors, meaning they are too connected to fail. second, can many smaller market participants collectively engender systemic risk given that they are exposed to similar risks – are they too many to fail? for instance, a sharp hike in interest rates could weigh on multiple credit institutions at the same time. the objective of macroprudential oversight and regulation is to identify and contain such risks and misguided incentives. this can only be achieved by ensuring sufficient resilience in the financial system as a whole. bis central bankers ’ speeches 2. key statements of the financial stability review 2015 against this backdrop, allow me to summarise the current situation in the german financial sector by outlining the key statements made in our report. 1. low interest rates pose risks to financial stability as they squeeze banks ’ and insurers ’ earnings. institutions could then assume greater risks without having sufficient capital buffers to be able to cushion the impact of these risks. 2. dangers are also associated with an abrupt sharp hike in interest rates. banks that, for instance, had granted long - term, low - yielding loans would then have higher funding costs. 3. the business volume in germany ’ s shadow banking sector has grown. we see no evidence of heightened risks at this time, however. 4. macroprudential instruments are gradually being put in place. these instruments are intended to curb scale effects and procyclical effects. instruments that can be employed to mitigate risks arising from mortgage lending are under development. 5. the european capital markets union will be an important complement to the banking union. better developed and integrated equity markets, in particular, could play a role in improving the way in which risks are shared. 3. low interest rates and financial stability the current low interest rates are a global phenomenon. they reflect the low real economic growth and expansionary monetary policy stance observed around the world. consequently, attention is currently focused on monetary policy decisions and their impact on interest rates. however, an expansionary monetary policy can also cause significant risks to financial stability to build up. empirical studies have shown that monetary policy has an impact on the price of shares, bonds and real estate. the longer interest rates stay low, the more incentive market participants have to take greater risks. however, it can end up being a problem if misguided incentives cause risk

gent sejko : welcome address - annual conference of the bank of albania welcome address by mr gent sejko, governor of the bank of albania, at the annual conference of the bank of albania, tirana, 1 november 2018. * * * your excellency prime minister, your excellency minister of finance, dear professor berglof, dear governors and deputy governors, your excellencies, ambassadors, dear professors and representatives of the banking system, dear ladies and gentlemen, it is always a pleasure for me, as the governor of the bank of albania, to have the opportunity to open the proceedings of our annual conference. this year we are organising it in cooperation with the london school of economics and political science ( lse ), one of the foremost academic institutions in the field of research on economic and political sciences. the lse ’ s interest and the professional investment testifies that the cycle of our conferences has matured. i am sure that this year ’ s conference will uphold and even forge ahead the frontiers of our standards. engaging in open discussions and sharing our experiences will eventually help us to identify the optimum way for addressing the challenges that lie ahead. * * * this year ’ s theme is especially important not only to central banks but also to all the decisionmakers for the economy. while focusing on the direct implications for the monetary policy, it touches on issues that address strong and dynamic changes that economic structures, financial markets, doctrines of economic management, and societies and human communities are experiencing at the local and global level. recent reports by prestigious international financial institutions point out that the prospects of economic development remain positive. likewise, albania is set on a steady positive trajectory of economic growth. our prudent economic policies, the constant improvement of balance sheets in the real and financial sectors, and the ongoing restructuring of the economy and of the growth model have created adequate premises for an increasingly fuller utilisation of production capacities and the convergence of inflation toward the target. let me explain this in greater detail. according to official statistics, economic growth in albania accelerated to 4. 4 % in 2018 h1, showing a broad base in terms of aggregate demand components, and a diverse composition in terms of sectors contributing to growth. in particular, albanian exports showed growth, while the level of foreign direct investments remained high, contributing to the narrowing of the current account deficit and the stability of the external position. the dynamism of the exporting sector and the high level of foreign