in the two years ahead, which would enable the return of inflation to equilibrium. notwithstanding the above said, the albanian economy continues to operate below its potential and inflation remains below bank of albania ’ s target. these developments require maintaining simulating macroeconomic policies for at least some quarters ahead. the bank of albania has urged and supported the fiscal consolidation trend, pursued by public finances. fiscal data, overall, are in line with this target, albeit work should still be done with regard to the rigorous implementation of public borrowing and spending plan. the monetary policy implemented by the bank of albania is at very simulating parameters. interest rates and financing costs are at historical low levels. the bank of bis central bankers ’ speeches albania has ensured that the market is fully supplied with liquidity and has provided longterm guidance on the monetary policy direction. in accordance with the monetary policy direction, the bank of albania has continued to implement easing supervisory and regulatory measures. also, we will announce a major project very soon, aimed at addressing definitely the issues related with the treatment and reduction of non - performing loans. all these measures have contributed to and are expected to better support the albanian economy with funds. as i said above, the economic and financial equilibriums of albania are solid. the current account deficit improved in the first quarter and the albanian foreign exchange position is quite positive. banking system ’ s liquidity and capitalization indicators have been improving. the growth of non - performing loans decelerated and the albanian banking system is profitable. taking into account the international setting, i would like to guarantee the public that the banking system has no direct exposure to the greek crisis. our analyses, both at individual bank and system level, confirm that that it would maintain the soundness and normal operations even in extreme adverse scenarios. lastly, the implementation of the imf arrangement not only guarantees the stability of the public debt, but also provides us with the possibility for additional funds to withstand any unexpected and unwanted development. the arrangement is an insurance policy, which should assure all the economic actors for the country ’ s financial soundness. dear media representatives, concluding, i would like to re - emphasize bank of albania ’ s commitment to safeguarding the country ’ s economic and monetary stability. in our judgment, the adopted policy framework provides a sound and coordinated development platform. pursuant to our legal requirements and the development programme, the bank of albania will continue to work on : • maintaining price stability and sustaining the country ’ s development. under the current

nature and outcomes of this cooperation. the crisis showed few weakness in the model of growth adopted by the emerging economies of south east europe, but is also true that, to some extent this behaviour was also encouraged by the development strategies of financial groups in the region, as it is also true that there was also some weakness in the coordination and collaboration between different european union institutions, such as monetary policies ( ecb ), fiscal policies ( of member countries ) and the inexistence of specific mechanisms ( such as bailout funds ) to safeguard the european union during difficult economic times. this conference pays homage to these lessons, while acknowledging the importance of coordination, by mutually collaborating in multidimensional institutional levels, within the region and with our common partner countries. we in the region hope that our foreign partners share this same view. bis central bankers ’ speeches the albanian economy and its financial market share similar characteristics with the other economies of the region. our main trade and financial partners come from the eu economy. therefore, developments in the eu are directly and indirectly transmitted and play an important role in economic developments in albania. our reliance on eu affected not only our economic development but also constrained the effect of policy measures. several european banking groups operate in the albanian financial sector. these entities brought into the albanian market a lot of valuable know - how and experience, playing, thus, a crucial role in the financial integration of the albanian economy to the european union. however, eu supervisory regulations and risk requirements for european financial groups, along with the approach in which they are implemented, are posing significant constrains on our economy and the efficiency of monetary policy to respond to economic developments. faced with new and stringent capital and risk requirements, banks are trying to comply by adjusting their future business plans and the size and composition of their balance sheets in the economies of the region. these tighter regulations approved by european supervisory and banking authorities and, subsequently, implemented by parent banks have already been accompanied by a decreasing level of credit to the economy. our research shows that further tightening of crediting, due to the legal reforms currently under way, could have an important effect not only on economic activity but also on commercial bank asset quality itself, in particular situation with non - performing loans. a deterioration of economic activity would play out mostly in the same way, leading to worsening of npl ratio, leading to smaller banks ’ profit and tighter capital constrains, along with slower growth. this second channel is seen as arguably more