shown any signs of panic or confusion. the bank of albania considers that the rationale behind is the prudence shown in the recent years with respect to the banking system ’ s financial stability. the high level of resilience and the quick recovery were a consequence of a number of important decisions. by adopting the new banking law in the republic of albania and a range of other monetary policy and banking supervision - related decisions, we have aimed at firming up the macroeconomic balances further and strengthening financial stability. at the focus of the bank of albania ’ s strategy were the good governance and better risk management, improved banking activity transparency to the customer and the strengthening of internal control. this strategy peaked with a large - scale, exceptional and contemporary programme of open and constant communication with the public. i believe that the favourable liquidity and capital situation characterizing the albanian banking system on the eve of the financial crisis last fall helped to cope with the withdrawal of deposits during september - october 2008. however, the bank of albania deemed as necessary the prudent monitoring of the situation and took a number of actions, which alleviated the pressures over the banking system substantially. these actions helped to relax the liquidity situation and they were in harmony with the ecb ’ s operational response to the crisis. first, an ad - hoc task force was set up. its main responsibility was and remains the daily monitoring of each individual bank. our direct conclusion was that the analysis should consider all micro - level aspects, each and every cell of the system and indicators. second, a number of facilities were adopted for the incessant supply of the system with the required liquidity. the type of auction for the injection of liquidity changed to fixed - price auctions, the collateral base for repo agreements expanded, the use of the required reserve increased from 20 to 40 percent, and the spread between the bank of albania ’ s key interest rate and overnight loan reduced from 175 to 75 basis points. third, through a special act, the bank of albania required higher capitalization of banking activity from the banking sector, adding to the guarantee of the banking sector ’ s financial soundness. current financial system developments show that the overall situation in the banking sector has improved constantly. deposits are back to the banking system, attesting to the improved public confidence. credit to economy has also shown signs of recovery. another positive development relates to the fact that lending in the albanian lek has increased considerably. the european markets have been

ardian fullani : monetary & financial stability policies – lessons from the crisis speech by mr ardian fullani, governor of the bank of albania, at the 8th international conference of the bank of albania : " monetary & financial stability policies – lessons from the crisis ", tirana, 17 september 2009. * * * honourable mr. prime minister, dear governors, distinguished guests, i feel deeply privileged to open the proceedings of the 8th international conference of the bank of albania entitled : “ monetary & financial stability policies – lessons from the crisis ”. i hope the proceedings will help the participants better realize the issues facing the global economy during this period and draw the proper lessons. i am personally convinced that the prominent speakers ’ reputation is a guarantee in this regard. before i invite the guests to discuss the features and lessons drawn from the global and regional crisis according to their viewpoints and experiences, allow me to say a few words on this conference. the topic chosen to be dealt with in this conference is at the forefront of the institutions ’ agenda, responsible for macroeconomic policies and financial system surveillance at a national and international level. the panic that followed the lehman brothers ’ failure almost a year ago transformed the turmoil in the u. s. mortgage loan market into a genuine globalwide financial crisis. the integration of the financial markets caused the crisis to spread swiftly, while the vital role of the credit system in free market economies transformed it into a global recession, hitting the east and south - east european countries as well. the experience gained so far has allowed a better acknowledgment of the causes that led to the crisis and the factors that triggered and accelerated its spreading, and a reassessment of the diverse supervisory and regulatory practices. i would like our discussions on the crisis to focus on two directions : what we learnt and what we could not learn from the crisis. among the numerous aspects debated at length, i would like to distinguish three of them : the dichotomy between the state and the market, the degree of confidence in the forecast models, and the importance of coordinating the pre - emptive measures. with respect to the “ state vs. market ” debate, i would like to re - stress my unwavering confidence in the market and our commitment as policy - makers to make it operate by the rules and efficiently 24 / 24. the last few years have witnessed the rapid development of forest models and techniques. avoiding the tendency to underestimate their high importance to the day -