and sound financial foundations, aggregate demand has been weak during the first nine months of 2012. both domestic and foreign demand suffer from high uncertainty, relatively tight lending standards, and limited space for discretionary and stimulating policies. in the domestic context, the economy continues to face relatively low consumption and private investments and an absent stimulus by the public sector resulting from the orientation of the fiscal policy towards maintaining long - term stability of the public debt. bis central bankers ’ speeches on the other hand, the banking and financial system remains sound and liquid and capital indicators are at relatively satisfactory levels. the activity of the banking sector continues to be strongly supported by the increase of publics ’ deposits. banks have reinforced their capital position to boost resilience against risks arising from banking operations. as at the end of june 2012, the capital adequacy ratio stood at 15. 6 %. credit developments, however, remain a problem that is subject to the performance of economic activity and expectations for the future. slowdown of economic activity and decline of demand for investments and consumption by businesses and households are determinants of private sector credit and credit quality performance. on their side, banks have evidently increased their prudence as regards lending. periodic stress tests show that the banking sector is resilient and can withstand any adverse events to economic performance. however, we are aware that the banking industry is facing difficult challenges. besides recovery of economic activity and confidence for the future, improvement of credit quality requires also the completion of legal issues to enable and facilitate collateral execution. selling impaired assets at their real market value is the starting point of the process for making financial correction and enriching the private sector ’ s balance sheets and the financial system a whole. cleaning up balance sheets would promote economic activity through consumer investments, by ensuring a constantly improved credit quality. currently, the mutual influence of economic activity and credit quality is the main concern to monetary policy. efficiency of successive interventions by lowering the key interest rate is overshadowed by negative expectations. consequently, the effects of business and household consumption and investments on domestic demand are not at the desirable level. in spite of these problems, economic growth remains in positive territory, but below the potential. according to our estimates, it will remain positive even in the future. economic and financial operators ’ inflation expectations remain anchored around the bank of albania ’ s target. good liquidity condition and capitalization of the banking sector, and stability of macroeconomic indicators have led to harmonised economic policies for maintaining the status quo

to firms with growth potential and lending without conventional collateral or guarantees. for the latter, the lending method that is considered most likely is asset - based lending ( abl ). abl takes firms ’ assets that are closely tied to their businesses – such as their inventories, equipment, and machines, as well as accounts receivables – as collateral. abl currently plays a limited role in japan but is a quite popular lending method in the united states. the greatest merit of abl is that it enables firms that do not have sufficient real estate collateral or corporate managers ’ personal assets to raise financial resources. for example, start - up firms tend to have a high ratio of accounts receivables to total assets. they will be able to raise funds for business expansion more smoothly if they can make use of their accounts receivables as collateral. abl is said to be more time - consuming compared with lending against real estate collateral. viewed in another way, however, the process of utilizing abl allows a borrower firm and a financial institution to take more time and have closer communications regarding the characteristics and future vision of firms ’ businesses. this will encourage a borrower firm to make business decisions based on more accurate analysis of its growth potential and profitability. furthermore, the bank has taken various measures in terms of supporting the disaster areas. one example is the funds - supplying operation that provides financial institutions in disaster areas with longer - term funds at a low interest rate, with the aim of supporting these institutions ’ initial efforts to meet demand for funds for restoration and rebuilding. going forward, in the phase when demand for funds for the purpose of restoration and rebuilding becomes full - fledged, the bank will examine how to provide additional support appropriately as the central bank, based on the specifics of such demand, measures by private financial institutions, and support from the government. in this manner, the bank has continued to make various efforts on the monetary policy front, taking into account the time horizon of short - term and medium - to long - term periods. the bank will continue to carefully examine the outlook for economic activity and prices, and take appropriate actions as necessary. concluding remarks i see i am running out of time, so i would like to conclude my remarks. the earthquake has posed additional challenges to japan ’ s economy, which had already faced significant problems to tackle. it is true that japan ’ s economy is facing very difficult challenges. however, we should avoid falling into pessimism