all these aspects of financial stability. as far as the conduct of monetary policy is concerned, it may be noted that monetary policy in india used to be conducted till 1997 - 98 with broad money ( m3 ) as an intermediate target. the aim was to regulate money supply consistent with two parameters, viz., ( a ) the expected growth in real income, and ( b ) a projected level of inflation. on the basis of estimates of these two crucial parameters, the targeted monetary expansion could be set. in practice, the monetary targeting framework was used in a flexible manner with feedback from developments in the real sector. however, questions were raised about the appropriateness of such a framework with the changing inter - relationship between money, output and prices in the wake of financial sector reforms and opening up of the economy. the working group on money supply ( 1998 ) sought to address some of these issues. the most significant observation of the group was regarding the changing nature of transmission mechanism as it highlighted that the interest rate channel was gaining in importance. in line with this thinking, since 1998 - 99, the reserve bank has switched over to a multiple indicator approach. as per this approach, interest rates or rates of return in different markets ( money, capital and government securities markets ), along with data such as on currency, credit extended by banks and financial institutions, fiscal position, trade, capital flows, inflation rate, exchange rate, refinancing and transactions in foreign exchange available on high - frequency basis, are juxtaposed with output for drawing policy perspectives. what is the operating procedure of monetary policy in india? in the current monetary policy framework, with growing inter - linkages in the financial market, reliance on direct instruments has been reduced and liquidity management in the system is carried out through omo in the form of outright purchases / sales of government securities and daily reverse repo and repo operations under liquidity adjustment facility ( laf ). the laf has enabled the reserve bank to modulate short - term liquidity under varied financial market conditions, including large capital inflows from abroad. in addition, it has enabled the reserve bank to set a corridor for the short - term interest rates consistent with the policy objectives. this has also facilitated bringing down the crr of banks without engendering liquidity pressure. these operations are supplemented by access to the reserve bank ’ s standing facilities. in this new operating environment, changes in reverse repo and / or the bank rate have emerged

ardian fullani : overview of albania ’ s latest economic and financial developments speech by mr ardian fullani, governor of the bank of albania, on the monetary policy decision - making of the bank of albania ’ s supervisory council, tirana, 30 january 2013. * * * today, on 30 january 2013, the bank of albania ’ s supervisory council reviewed and approved the biannual monetary policy statement. based on the latest monetary and economic developments in albania, and following the discussions on their future outlook, the bank of albania ’ s supervisory council decided to lower the key interest rate by 0. 25 percentage points. after this decision, the one - week repurchase agreement rate drops to new record - low level of 3. 75 %. the supervisory council deems that further easing of monetary conditions will help in meeting the inflation target in the medium term. let me now proceed with an overview of economic and monetary developments, and key issues discussed at today ’ s meeting. * * * the albanian economy improved slightly in the seconds half of 2012. this performance was driven by a fuller reflection of monetary stimulus and improved external economic and financial environment. however, the economic activity remains below potential and the growth resources appear unstable. production growth is not reflected in decreasing the overall uncertainties, which contain private investments and consumption, and lead to downward credit demand and supply. the banking system has sound and liquid balance sheets but it remains highly prudent in terms of financing long - term investments. these tendencies will condition the economic developments over the period ahead. inflationary pressures were low during the last quarters. reflecting also the bank of albania ’ s prudential monetary policy, inflation settled within its target in 2012. the increase in annual consumer prices was 2. 4 % at year - end, while the annual average inflation rate was 2 %. the inflation rate increased progressively during the first three quarters and fell slightly during the fourth quarter. inflation volatility was mainly driven by food prices, which were affected by the international market and domestic production. the effect of other basket goods ’ prices on inflation was low and slightly volatile. regulated or administered price inflation was insignificant, while higher prices for consumer goods, oil and primary commodities in the global market did not cause any higher inflation in the albanian economy. from the macroeconomic viewpoint, all determinants of inflation contributed to keeping it at low levels. the incomplete utilization of productive capacity was associated with businesses ’ low demand for labour, hence no pressures for increase in