. in this way, regulatory systems are advised to be reviewed and elaborated to be better adapted to current developments and to financial system ’ s perspectives. the financial system does not operate in the vacuum. it functions under real conditions and our task is to adapt to best experiences. i think our task is to identify the best practices and to try to adjust them to the real conditions of our economy, because by adjusting them to the whole regulatory framework and banking activity, we come to a motif and motivation : the european community. i am confident that you will use this seminar to find out joint elements in the activity of your institutions, as well as to identify the distinctions. i think it would be valuable to identify also the cases that represent what is regarded as the “ best practice ” in deposit insurance area. in this way, it would contribute to the achievement of the objective to standardize the regional insurance practices and to create a clearer vision on the insurance activity performance in the future. the activity of the albanian deposit insurance agency is new. as such, its capability of operating in extreme cases is not proved yet. nevertheless, efforts are made constantly for fulfilling the necessary legal framework and procedures, covering all possible directions of its activity. simultaneously, there is worked in terms of organizing the structure, increasing the institution ’ s staff number and training. emphasis is laid on the dia ’ s cooperation with the bank of albania, the supervisory authority, so that the dia carries out its functions effectively. at the same time, the relation with the ministry of finance is taken into consideration in organizing the deposit insurance agency ’ s structure, so as to have the solid presence of the state in it. the forms of this cooperation are numerous, but all of them should be first consolidated under normal conditions of the banking system activity. the main elements of this cooperation are : • exchange of information on supervisory practices and observance of regulatory requirements by the insured entities ; • organization of joint trainings in getting acquainted with respective functions ; • acquaintance with and discussion on manuals and procedures requiring the commitment of both institutions in certain cases, and the testing of these procedures. the bank of albania and the deposit insurance agency are working for enhancing this cooperation constantly. 2 / 3 a number of legal and regulatory alterations that are being prepared in parallel by both our institutions, and the exchange of information, as well as more frequent contacts between both institutions serve this purpose. it is aimed at adopting best practices in this area, and at implementing the recommendations given

other countries in the region, which are in a more advanced stage in their efforts of adopting basel ii requirements either partly or fully. we have also the privilege of being close to the euro area member countries, like italy and greece, with their banks playing an important role in our financial system. this gives us the possibility to benefit out of expertise of the supervisory authorities of these countries, in the process of adopting new requirements ; fourth, we have expanded our cooperation with other “ peer ” countries in the region, as the variety of problems found in our countries is very similar and the experience sharing in this respect, is very practical ; fifth, we are trying to promote an environment where issues of basel ii are being discussed in a professional level. we are not focusing only on directly involved parties ( including government, other supervisory authorities of the financial market ) but also on relevant clients of the banking and the financial sector. concluding, i would like to stress that basel ii represents a logical and appropriate successor to basel i. it embeds recent and past lessons and gives excellent directions to financial system and supervision authorities how to move ahead. on the other hand, its implementation may be a bit too ambitious and a difficult task for our countries. therefore it is in our interest to find ways to make it more suitable to our needs by following a gradual approach rather than jeopardising its success through an uninformed adoption. according to basel ii, the assessment of the borrower ’ s credit risk will depend on the performance of the economy, whether it is in a upward or downward trend. in the worst case, when the economy will be wholly swept in recession, banks will have automatically either to increase the level of capital, or shift towards less risky assets, that most intuitively calls for a slow down to provide loans thus engendering credit crunch and further recession.