and implement reforms fast. the natural tendency for most politicians is to favour gradual adjustment. “ gradualists ” say that in case of fast changes the risk of possible policy mistakes is higher, leading to losses in physical and human capital. opponents of that view, including myself, certainly acknowledge those risks. but we feel that the costs of delayed action may sometimes outweigh its benefits, as postponing the inevitable and failing to accept the changed reality will lead to additional unnecessary costs. one should not want to keep alive old structures that clearly cannot be sustainable in the changed world for longer than necessary. this is a waste of limited resources and reduces long - term productivity. there is a saying that “ a crisis should not be wasted ” – negative shocks to an economy should lead to productivity gains. our experience shows that quick decision - making and decisive policy actions can shorten the period of uncertainty that also weighs on economic activity. people and entrepreneurs in countries with delayed reforms overreact, leading to a higher level of risk aversion than necessary. overshooting in risk aversion results in lost jobs and postponed investments. bis central bankers ’ speeches estonia, for example, lost almost 20 % of its gdp during the crisis. by now we have regained the pre - crisis level, contrary to many countries that preferred to delay the necessary reforms. some of them still face years of decreasing economic output. in summary, i would like to stress that prolonged fiscal consolidation and structural reforms can lead to unnecessary costs to the society. some countries have chosen to delay the pain and take only gradual steps with their structural reforms, but this has in fact resulted in a reduction of the overall economic activity to the extent that might be no less than the shortterm cost of a quicker adjustment. the difference is that they are still not done and cannot hope for a rebound that might otherwise be there. bis central bankers ’ speeches

requirements of the regulatory framework. we would kindly ask you and your shareholders for dedication in this process, not only to find the necessary human and financial resources, but also the most appropriate forms for a quick, transparent, and consistent handling of non - performing loans. we need to bear in mind that lending carries along risks that are difficult to identify at the time of disbursement. these risks are determined not only by the quality of bank lending procedures, but also by significant external factors, including the performance of the economy. this uncertainty permeates the current phase our banking sector is going through. therefore, it is indispensable that bank management structures and their shareholders commit the necessary financial resources to cope with the possible additional costs in the future. for shareholders, this implies not only retention of profits in the bank, but also adding new capital in case of need. remember that it also represents a more general trend in the banking industry globally, with a number of new forthcoming standards that provide for improving the quality of bank capital and increase of its size. our banks should gradually begin to adapt to these new standards. for senior managers, strengthening the control systems of the bank activity remains a primary objective, especially for those activities that generate the main revenues and expenses arising from the activity. risk management structures should be really empowered and have a stronger voice in decision - making. banks should continue to further improve the efficiency of their operations, including the establishment of a better control over the costs of the activity. setting priority activities for your institution will allow you to identify new investment needs as well as those activities that use bank resources inefficiently ; they should, in turn, be restructured. this process will positively affect the financial performance of the institution, and will allow the implementation of other active policies in areas that benefit the activity of the bank. we all know that banking is an activity based on trust. for this reason, the bank ’ s services to customers should be “ first class ” across the entire bank network. this means that customers should be served correctly, timely and transparently. banking services should be provided in accordance with the clients ’ financial literacy, in any case highlighting, the benefits and the risks that customers may incur as they use your bank products. in the context of its role as the supervisory and regulatory authority of banking operations, the bank of albania will continue to carefully monitor and address the challenges facing this bis central bankers ’ speeches activity. our regulatory framework and supervisory and operational