policies instruments. the society needs to be aware of these instruments, understand them, evaluate stimuli and incentives, and properly respond to them. the important role of consumer behaviour for the policies success is clearly evidenced in the “ rational expectations ” theory. a simple intuition behind this theory is that rational individuals shape their expectations using the available information optimally. they respond to new information by adopting their behaviour to maximise welfare. in this case, individuals “ equipped ” with financial literacy read and understand developments in economic policies and respond to them rationally. this mutual understanding would drive the economy towards the desired direction. the central bank adjusts its policies in response to the actual behaviour of agents, who would adjust their behaviour in line with the central banks policy. for this interaction to happen, both the public and the central bank need to speak the same language and understand each other unequivocally. money management needs this two - way understanding and the active role of individuals. consequently, the trust and confidence of the public is earned, monetary policy objectives are achieved and its reliability is enhanced. thirdly, i would like to underline that financial education of individuals establishes a more stable society on one hand and a stronger and secure banking system on the other. efficient and ongoing financial education is a path trotted by millions of individuals and families in their endeavour to achieve financial goals and accumulate wealth. the positive effect of this process is reflected in a stronger economic and financial stability for the entire society. the banking system has its role to play in this process, mainly through lending to businesses and households. as a regulator, the bank of albania gives its share of contribution ensuring that banks strictly abide by legal and regulatory obligations in relations with their customers. on the other hand, financially literate customers, contribute to the bis central bankers ’ speeches development of the banking system with their increasing demand for financial products and services. therefore, the result is clear : higher efficiency, lower charges, better services and healthier and safer banking system. fourthly, i would like to highlight that financial education, over time, improves the living standard in the long run, including retirement age. in a recent analysis, the essential reason why an individual needs to amplify his financial literacy is that this investment will help him to reach his money management objectives. although personal objectives may vary from an individual to another, on financial education point of view, improvement of society ’ s living standard is guaranteed and confidence for the future is boosted. financially literate

that causes eventual massive bank runs. this channel is particularly pronounced for developing economies, where contagion is faster due to their weak financial literacy, the historical lack of bank failures, and the presence of weaker institutions. in this context, the resolution regime serves as a tool for restoring market discipline and avoiding the risk of contagion. in essence, resolution is an integral part of banking supervision applied to the final stage of a bank ’ s life, should measures taken during the standard or intensive supervision stages fail to improve the situation of a distressed bank. the drafting of the resolution regime was accompanied by the strengthening of the supervision regulatory requirements, which aim to increase the resilience of the bank and strengthen the financial market structure to avoid the moral hazard. in the wake of the crisis, experts have reached the conclusion that there is no bank model that would perform well or poorly in times of crisis. different models of failing banks showed that the issue stemmed from undertaking high risk, financing with short - term instruments and insufficient protection offered by capital, even where minimum requirements were met. this conclusion has been reflected in higher supervisory requirements for quantity and quality of capital and liquidity, limits on the leverage ratio and maturity mismatch between assets and liabilities. the banking sector needs to comply with these requirements within a defined medium - term framework. regulatory measures are also accompanied by the consensus on the need for structural reforms in the financial system, namely, separation of risk - bearing financial speculation activities from deposit collection activities, and issues related with too big to fail banks, by discouraging their excessive growth. the biggest lesson of the financial crisis was that micro - prudential supervision of banks was not sufficient to safeguard financial stability because the system as a whole behaves differently from individual parts. in an effort to make themselves safer, financial institutions may undertake such behaviours that collectively damage financial stability. the banking activity takes place through its own cycles, known as financial cycles, which may deteriorate the business cycle of the real economy. banks are exposed to collective macroeconomic shocks, which weaken them, at the same time, thus affecting financial stability. the understanding of this lesson dictated the need for macro - prudential supervision in addition to the micro - prudential one. among the most effective instruments of macro - prudential supervision are the requirements for capital buffers to counter the creation of systemic imbalances, as well as capital buffers for systemic banks, which being large enough, may cause social