of albania has approved several regulations focusing on microfinance institutions and development. this regulatory framework, comprises the supervisory requirements to start and operate a saving and loan association, the indicators that enable their reporting and their financial analysis, and the principles based on which the on - site examination of such institutions occurs. the regulation of the bank of albania “ on licensing the savings and loans associations and their unions ”, is the first document issued by the bank of albania in this area, representing a big step forward into the formalization of these institutions. it defines the documentation requirements for the license application, the deadlines and the authority that should grant the license. these requirements are directed to the single associations, to the union, and to the union member association. it has been recognized the role of representing union proposed member associations in the licensing process, meant also as an important tool to induce single sla to become union members. the number of the unions is certainly not limited. the other important regulation is that of “ the supervision of savings and loan associations and their unions ”. in this regulation, the bank of albania has defined supervisory indicators for certain typologies of risk that are characteristic of current stage of development of the microfinance institutions in albania. counterparty risk is assessed through the requirements for a consistent process of loan portfolio analysis. these includes the ways the loans are classified, their provisioning requirements, their potential individual or group guarantees, the supervisory norms of the loan quality etc.. in addition, the counterparty risk is indirectly controlled by the requirements in capital adequacy of the institution. there are also other risks that are considered in the regulation, for which certain requirements have been defined. for the liquidity risk, there have been set up various norms for maintaining sufficient liquid assets and limiting the duration of the loans. for the concentration risk, the regulation requirements focus on the lending activity, and set out the norms for the net exposure in relation to the total assets of the institution. this regulatory framework is meant to be actively orienting the activity of the microfinance institutions, and as such, will be revised as the developments may require. besides these two regulations, the examinations manual of these institutions has been prepared. it is based on the camels system we use for banks, and is aiming at assessing the adequacy of the internal policies and procedures, the quality of the management and the identification, assessment and monitoring of risks. the accounting manual is also prepared and is based

overall financial stability. cross - border perspectives – avoid straightjacket measures thirdly, i would like to stress the importance of cross - border perspectives on macroprudential policy. the business models of financial institutions differ substantially, reflecting the different needs for financial services in each country. moreover, we should also recognize the significant differences in legal and regulatory frameworks for financial services among jurisdictions, as a consequence of the authorities ’ best efforts to tailor them to the people ’ s needs. in some jurisdictions a traditional “ buy - and - hold ” model is dominant, in which banks generally rely on stable household deposits in their funding and make commercial loans. in such cases it is especially important for supervisors to grasp credit risks in banks ’ loan portfolios. however, in other jurisdictions, where an “ originate - to - distribute ” model with market - based wholesale funding is more pronounced, supervisors should pay more attention to liquidity structure, the risk - profile of structured products and where the ultimate risk lies. “ level - playing - field ” is undoubtedly important. nonetheless, what we really need is a playingfield that should lead to fair competition among financial institutions of different types and backgrounds, both in a theoretical and a practical sense. thus, a global regulatory framework should have sufficient flexibility in order that regulators can take account of regional and functional heterogeneity. a one - size - fits - all regulation, which some institutions in a specific jurisdiction could more easily circumvent, might eventually prove rather harmful to social welfare. moreover, too rigid regulation might encourage less - transparent entities to replace banks ’ businesses and thereby stimulate “ shadow - banking ” in some countries. a one - size - fits - all approach, which would put carnivorous lions and herbivorous elephants in the same cage, can never produce good results. we need to strike the right balance between rules and discretion in financial regulation, making full use of the “ three pillars ” framework of the basel accords, especially pillar ii. i also reiterate that liquidity issues are critical, especially from a cross - border perspective. central banks are strongly required to monitor liquidity risk, and provide liquidity if necessary, so as to contain cross - border spillovers. in this regard, the bank of japan, through its off - site monitoring, observes closely the liquidity position of branches, subsidiaries and affiliates of overseas financial institutions. moreover, bilateral swap agreements between major central banks, such as the fed, the ecb and