stability of the currency and currency arrangements ; • an extremely high level of monetization ; • a track record of financial stability and no major systemic crises as a result of effective supervision of the banking system ; • a good mix of foreign and local banks ; • high levels of management and banking skills supported by good training facilities ; • high level of technology and automation ; • access to information, domestically, regionally and internationally ; • a large pool of skilled workers to draw on through the local education system and graduates in the region and diaspora ; • proximity to the north eastern united states which is in the same time zone as the currency union. given this platform, it is now necessary that the financial sector should play a leading role in the development process. the strategic approach adopted by the eccb has been to move towards the creation of a single financial space through the removal of the legal and administrative barriers dividing the financial systems in each country and creating regional markets and institutions. the passage of uniform legislation has been the means by which barriers have been removed. banking, insurance, credit union and securities legislation has been drafted on this basis, and several administrative bottlenecks have been dealt with through mutual agreement. with respect to markets and institutions the following have been created over the last few years : • an inter bank market for liquid funds between the commercial banks in the currency union ; • a regional government securities market for treasury bills and bonds ; • a regional market for equities ; • a secondary market for home mortgages. with respect to institutions, there has been created : the eastern caribbean home mortgage bank ; the eastern caribbean securities exchange. two other institutions are now on the drawing board namely – the eastern caribbean enterprise fund ; the eastern caribbean unit trust. the former is intended to be a multi purpose institution providing venture capital services, debt instruments, technical assistance and export credit guarantees. this institution will seek to mobilize funding for small and medium enterprises within the currency union. the unit trust will seek to provide saving instruments of a wider range to low and medium range income earners who have very few options outside of the banking system. in addition to the above, the eccb has encouraged the formation of sector associations, for example, o the bankers association ; o the institute of chartered accountants ; o the eastern caribbean institute of bankers. the eccb now finds it necessary to proceed on the basis that there is an urgency to proceed with this programme of money and capital market development in order to position its member countries

and reflecting the time lag of the transmission mechanism, our monetary policy easing has been reflected across all the segments of the financial market. this policy has managed to cut down financing costs of the banking system and of the public and private sectors, and has contributed to establishing adequate conditions for the expected growth of demand and economic activity. until now, however, it bis central bankers ’ speeches has not been reflected in the real economy up to the desired levels. as previously stated, it relates largely to high risk premiums, which arise from uncertainties for the future. the albanian consumers and businesses appear reluctant to increase consumption and investment, despite the lower interest rates in the banking system. credit supply has been relatively tight, due to the perceived risk by banks and risk aversion policies adopted by european banking groups operating in albania. the second quarter has provided signals for an increase in credit demand, although credit expansion remains in negative territory. in may, credit outstanding for the private sector was 1. 8 % lower than in the previous year. the bank lending survey for the second quarter of 2014 suggests for easing lending standards applied to both businesses and households, and their upward demand for credit. new credit has been dominated, for months, by credit extended in the albanian currency. this is a welcomed development as regards the enhancement of monetary policy effectiveness. the albanian reality and world experience suggest that credit recovery will continue to be conditioned by the steady improvement of the economic activity at home, reduction of risk premiums in certain sectors of the economy, and more positive developments in the labour market. looking ahead, economic growth and inflation will continue to experience low rates. in this context, our country does not differ from the rest of the countries in the region and other european countries in general. baseline projections of the bank of albania show that the albanian economy will grow at higher rates than in the previous year, sustained mainly by the expansion of domestic demand. easing of monetary conditions, adjustment of private and public balances, and improvement of economic agents ’ confidence are expected to feed in the domestic demand. the fiscal policy is expected to be consolidating, in line with the medium - term budget plan and commitments with the international monetary fund. structural reforms initiated in certain sectors of the economy are expected to regulate and stimulate their activity, as well as contribute to easing lending standards applied to them. the financial system remains well capitalised and liquid, while the expected revision, on the easing side, of lending standards will lead to a more