ardian fullani : regional cooperation in south east europe speech by mr ardian fullani, governor of the bank of albania, at the conference organised by the central bank of bosnia and herzegovina, sarajevo, 13 - 14 september 2007. * i. * * introduction it is a pleasure to be here today and engage in this discussion on strengthening regional cooperation. this meeting in bosnia builds upon other important activities in which we have come together to discuss similar issues. it is one thing to organize one activity where the governors of all central banks come together to share their views and agree upon importance of regional cooperation, but it is completely another thing to have them to bind themselves to continue the institutional dialogue. today, we present another proof of such commitment and show that regional cooperation in see is not a slogan but a real process with real results and products. ii. why cooperation? in general the nature and the character of any form of cooperation is shaped by the most important problems that central banks deal with. therefore the stage of economic development, and economic and social challenges faced by our economies are bound to play an important role in this cooperation. a. common challenges while the overall region seems to experience macroeconomic stability, issues that the central banks face today in their respective jurisdictions with their main partners bear striking resemblance. most importantly we share the same partners. we have all accepted the same challenges and set similar priorities which converge to the same objectives. dealing with a much faster globalization of financial sector than the rest of the economy, guarding macroeconomic and financial stability in face while this is happening, and the challenge of european integration define similar problems across the region. structural reforms i would consider as the main future challenge. building a stable financial system, enhancing financial infrastructure, improving financial markets, deepening and broadening through innovative initiatives provides fundamental ground for such cooperation. the memories of the latest episodes that have trembled financial markets in the western hemisphere, and the architecture of the financial system that is developing in our region ( meaning the same banks becoming major players in each country ) should make us aware of the potential risks. they indicate that each financial market remains highly exposed toward negative phenomenon that could develop in any of the region ’ s economies. b. common destination in this respect, i see enormous possibility for cooperation and policy coordination in the direction of information sharing, institution building, modification of the legal infrastructure and lobbying in european structures. facing these problems in group rather than separately will allow to benefit and embrace the positive effects of “ economies of

of economic integration. with the introduction of the euro and the conduct of a single monetary policy by the ecb, with the emergence of an increasingly integrated financial market and a single euro exchange rate, the notion of an " eu economy " has gained real substance. as a consequence, the eu has come to be recognised in the world as an entity in its own right. further efforts to develop a " single voice " for europe in international economic and financial affairs are set to reinforce this perception. with regard to deeper political integration, i believe that the eu demonstrated in nice that it is ready to gradually move towards strengthening the truly european element of decision - making by introducing more qualified majority voting - even though many people expected, and hoped for, greater progress on this issue. seen from the perspective of independent central bankers - with their necessary distance from politics - it appears that the main accomplishment of the nice summit was not necessarily the conclusion of the intergovernmental conference on institutional reform. rather, the summit's main success lies in what it set in motion : the launch of a thorough and comprehensive discussion about " who does what " at the european, national and regional levels of government. the results of nice will prepare the european union for the arrival of new members. notwithstanding certain flaws and shortcomings in the legal details, the greater europe will have its institutional framework. the focus of attention will now shift again to the candidate countries'preparations for eu membership. while a certain impatience on the part of the candidate countries with regard to eu accession, and even a speedy entry into the euro area, is understandable, the full impact of eu membership should be realistically assessed, in particular the consequences of the often intense competition within the single market. all candidate countries currently negotiating eu accession are committed to eventually adopting the euro ; there will be no " opt - outs ". provided that the future new member states demonstrate their ability to fulfil the maastricht criteria in a sustainable manner, they will, in time, replace their currencies with the euro. as i explained in our previous exchange of views, the euro will thus indeed contribute to healing the economic divisions in europe. at the same time, it is clear to me - and i imagine you would agree - that this will be a gradual process and a long - term rather than a short - term prospect. nevertheless, in order to ensure that the prospective expansions of the euro area run smoothly, the ecb, and the national