asset prices and financial frictions. under the current conditions, the largest central banks in developed countries have stretched central banking theory and practice beyond traditional activities. their balance sheets have increased beyond imagination and, in some cases, include private assets ; they have accepted a much broader role and have assumed more responsibility. this all new and untested type of central banking will have a strong impact not only on the nature of monetary policy and its interaction with other central bank objectives but also on the independence and credibility of the central bank itself. the nature of future monetary policy will largely depend on the success of the largest central banks to get out of this situation in a controlled and timely manner, without causing excess inflation and damaging central banks hard - earned credibility. these developments will affect monetary policy in the emerging markets through interest and exchange rates, but most importantly in the way central banks conduct their monetary policy. influenced by current practices of leading central banks, some other central banks have reoriented their objectives and engaged in activities which are traditional for development banks and governments. we have been careful to stay away from adopting and targeting such objectives not only in monetary policy but also in our macro - prudential policy. the bank of albania has traditionally based its policy on two important pillars. our first focus has been to achieve our inflation target and manage inflation expectations to preserve the purchasing power of our currency. this policy has simultaneously provided necessary stimulus to economic activity. second, our focus on banking supervision and financial stability has enhanced the confidence on our financial system and therefore increased the efficiency and credibility of our monetary policy. as i have said in april of 2008, during the annual conference with the banking system in albania, “ every investment we make today in financial stability yields increased efficiency in our monetary policy ”. bis central bankers ’ speeches recently, the bank of albania has introduced financial literacy as a third pillar of our policy and independence. this objective is founded on my belief that the first two pillars gain sustainability only if the public understand the role of the central bank, its independence and its policy. last but equally important, i would like to emphasise the need of cooperation and coordination with the fiscal policy. fiscal policy and its impact are facts of life which can ’ t be ignored. therefore, monetary and macro - prudential policies have to be designed and implemented in full awareness of its existence. a central bank does not live in an isolated island ; its success will, among others, depend on its ability to act in coordination and cooperation

- performing loans to total loans fell to 18. 2 % at the end of 2016, at the same level as in the previous year. therefore, the reduction of non - performing loans and creation of stimuli to boost sound lending has been and remains a priority issue for us. the bank of albania has worked in several aspects to address this problem. first, the assessment of the credit risk and the recoverability of non - performing loans have been subject to intensive monitoring during our on - site examinations. in parallel, we have maintained a prudent approach in assessing lending policies and practices applied by banks. second, the bank of albania has fulfilled its engagements under the national plan for the reduction of non - performing loans. in this regard, the bank of albania has made regulatory amendments to clarify the concept of non - performing loans write off and the administration of properties taken into ownership as a result of collateral enforcement. moreover, the bank of albania has cooperated with the imf to review the regulatory framework about the licencing of companies that purchase bad debt. third, we have strengthened the regulatory and reporting requirements for banks as regards the due management of credit risk, in accordance with european practices. fourth, we have intensified the communication with the banks to address the credit portfolio quality, concerning both the treatment of non - performing loan borrowers and loss loan write off. fifth, the coordinative role of the bank of albania has produced results in terms of restructuring borrowers exposed to more than one bank and will continue in this year to prepare an interbank cooperation platform for a solution to common borrowers ; the bank of albania is drafting it in cooperation with world bank ’ s finsac project. in our judgement, the steps taken insofar for resolving non - performing loans will contribute to a fruitful environment to boost sustainable and sound lending. this is a major priority, which requires a multidimensional action matrix and a broad cooperation between state authorities and the banking system. in this aspect, the bank of albania drafted and promoted the signing of a joint memorandum of understanding for the sound growth of credit in albania1. in the supervisory process, the bank of albania has supported the pursuit of pro - active policies 5 / 8 bis central bankers'speeches against potential risks, with regard to both the quality of the risk analysis performed by banks, and the creation of adequate provisions. this new approach, introduced a year ago, has required amending the regulatory framework, as well as internal practices and capacities