banking. despite solid performance in the last years the bank of albania has been vigilant to point out areas of the banking activity, related with domestic developments that required attention from the banking industry. until before the appearance of this international financial crisis, we have expressed our concern regarding the rapid increase in lending which, until 2007 reached up to 8 - 9 percentage points in terms of annual growth to gdp. the composition of the loan portfolio, which is dominated by the euro dominated loans, is also a point of concern, although this position is supported by a strong presence of foreign currency denominated liabilities in banks balance sheets, a generally supportive environment of exchange rates and interest rates over time and very close trade links to euro - area countries like italy and greece. in this regard, bank of albania has been consistent in its approach to introduce regulatory measures that would discourage rapid increase in lending, encourage banks to lend more in domestic currency and increase transparency toward clients on banks products and services. since the middle of last year, bank of albania has been vocal in its concern regarding the indirect impact of the financial crises, in particular regarding the performance of the real economy. we pointed out risks to economic growth related with a potential decline in credit from the banking sector, an increasing trade deficit ( due to a slowdown in exports ), a sharp contraction of remittances ( due to perception of lower wealth and increasing unemployment in the developed countries ). we stated that at these times, there is a much stronger need for a careful monetary policy and responsible fiscal policy. when it comes to the monetary policy, we have been careful in maintaining incentives for promoting savings in local currency assets and anchoring expectations for low and stable inflation rates. from an operational perspective, over the second half of last year, the bank of albania took a number of measures : • strengthening the surveillance of financial market developments, and in particular of the banking sector ; • strengthening bilateral and multilateral meetings with bank representatives, asking them for increased vigilance due to current international market conditions ; • increasing contacts with other domestic institutions that regulate and monitor the financial markets, in particular with the authority of financial market supervision ; • increasing the number of publications, including the financial stability report 2007 ( sept. ) and the statement on financial stability ( oct. ), which try to analyze the elements of the crisis and its potential effects on albanian banking sector and the economy ; • increasing the presence in the media, to explain the crisis, to clarify the position

withstanding the impact of this international crisis. in this effort, our economy will find support in factors related with the flexibility of the real sectors and of businesses, the appropriate level of some macroeconomic indicators related with fiscal and monetary areas, the stability of the banking sector and the very limited exposure to nonresident ’ s assets and liabilities, the ability of the public authorities to maintain fiscal and monetary discipline and to act in a decisive and harmonized way to support economic growth. thank you!