independence usually do not come from the public but from political leaders that resent distributed governance as well as checks and balances. in the last few months, we have witnessed a number of attacks on central bankers for coming in the way of ambitious populist agendas. independence and credibility this is a good reminder that independence of central banks cannot be taken for granted. no matter how deeply it is ingrained in the law, independence can always be taken away or significantly undermined, de facto or de jure. in the real world, central bank independence relies on the willingness of key stakeholders – most notably governments and legislatures — to play by the rules and by the ability of central banks to gain legitimacy and credibility from stakeholders. independence does not automatically guarantee credibility either. being free from political interference from politicians does not make a central bank infallible nor free from undue influence from other actors. credibility needs to be protected and cultivated amid social, political and technological change. page 2 of 8 central bank of chile july 2019 in a recent piece, the imf illustrates the importance of central bank credibility ( imf, 2018 ). it shows that central banks can better accommodate shocks with smaller output loss and social cost the more anchored are inflation expectations to the policy target, with lower pass - through from the exchange rate to consumer prices and lower persistence of inflation. more generally, public policies should be more effective the more credible the institutions in charge of them, as it helps aligning the behavior of the public to the policy objectives pursued. this is surely more important for independent institutions that cannot rely of a broader set of incentives and controls to shape the behavior of their stakeholders. a key question then is how to build credibility. this is an issue only partly addressed by economics. the rational expectations school would suggest adopting a clear - cut policy rule, communicating it openly and clearly, and ensuring strict compliance, to exploit the learning capacities from economic agents. this certainly underlies the growing popularity of inflation targeting and the forward guidance that comes with it. but even this may be challenging in a changing environment, where the business cycle overlaps with structural changes, and more so in areas, like financial stability, where policy targets may be hard to design and explain. from credibility to trust so, a broader approach to credibility - building may be needed. to this end, it may be useful to acknowledge that credibility is an attribute of a certain individual or institution : that of being believed or trusted. so surely, credibility does not

for the first time in the 2011 / 2012 academic year. also, the bank of albania ’ s annual international conference on “ building our future through financial literacy ”, attended by senior representatives of public and private authorities at home and abroad, contributed to enhancing the awareness of financial education importance and drawing the attention of respective authorities and institutions. * * * honourable members of the committee, both current and previous year were filled with challenges posed from the external environment and the internal structure of the economy. i listed above only some of the main accomplishments of the bank of albania and issues the bank was faced with in 2011, while the annual report contains more detailed information. the bank of albania will continue to work to rigorously fulfil its legal mandate and render maximum contribution to growth of welfare in albania. concluding my introduction on the report, i would like to share with you some reflections on albania ’ s economic outlook. recent years, have brought to the fore certain fragilities of the albanian economy. against this backdrop, economic policies should intensify their efforts to ensure a stable economic growth. in particular, increased productivity, ongoing restructuring and strong economic growth require the compilation and implementation of structural reforms to support domestic production and enhance its competitiveness in the national and international markets. also, economic policies should aim at further improving the free - market terms and conditions, in order to strengthen the structure of the market economy and enhance efficiency in our economy. bis central bankers ’ speeches lastly, the world experience, and ours as well, gained during these development decades, have shown that the coordination of policies of various institutional actors with market operations is an indispensable requirement to ensure ongoing progress of a country ’ s society and economy. in light of this, only continuing cooperation and coordination of efforts among all players would guarantee sustainable economic growth and welfare in albania. concluding my speech, i would like to remind you that in addition to bank of albania ’ s annual report 2011, the financial statements, certified by auditors, are also submitted. thanking you for your attention, i remain available to your questions and comments. bis central bankers ’ speeches