conditions of great poverty, he is able to save, despite the small output produced by his methods of working, and he does save, for he is very thrifty. capital is hoarded in gold. as a result, albania possesses a large stock of precious metals valued at 100 million gold francs. but this capital, which, if put to use, would suffice to place economic life in albania on the road to progress, is hidden. credit and credit organizations do not exist in albania. rates of interest at 30 % are by no means rare. the reason for this is the lack of confidence. the albanian ’ s belief in the stability of the government is not firm enough for him to risk his money in financial enterprises. in order to bring capital forth out of the hiding places in which it lies unproductive, confidence must be created... ” the best means to this end was the establishment of a national bank, an institution that albania needed greatly at that period. its establishment was urgently needed, for it alone could awaken albania to the conditions of modern economic life. its principal mission was to create confidence, and hence credit and the spirit of enterprise in albanians. the albanian national bank was established in 1925 as an albanian - italian joint - stock bank. it had the exclusive right of issuing the currency – in metallic coins ( gold, silver and bronze ) and banknotes – and determining its legal tender. the amount of banknotes the bank put in circulation had gold or silver coverage. the bank gave albania the first national currency – the gold franc – thus, going back to the gold - banknote monetary parity. the bank ’ s greatest achievement was the establishment of a sound monetary system that successfully weathered the difficulties of the global monetary system during the 1930s ’ global economic crisis. the albanian currency remained faithful to the gold - banknote parity until april 1939. being based on gold bars, the albanian banknotes were accepted at sight in all main bank counters globally. the albanian franc was one of the strongest european currencies in the period between the two world wars. the period between 1926 and 1939 corresponds to the establishment of a genuine banking system according to the market economy - based system and the banking traditions of that period. in the philosophy characterizing that system and time, which is basically similar to the current one, money played the main functions of the medium of exchange, store of value and unit of account. this is clearly evidenced in the press of

famous harry potter cannot exist without gringotts bank, which j. k. rowling describes as a multiple story white building with underground vaults that stretch to an unknown depth below the earth. economic and social development has constantly introduced innovations in the area of monetary systems, and also of banknotes and coins. the first banknotes were born as identical counter - values of the amounts of precious metals, mainly of gold, and they were explicitly guaranteed by the states and sovereigns for their gold parity. this characteristic is also found in the banknotes of the first period of the albanian state. the banknotes issued during this period are designated as “ gold franc ” implying their coverage with physical gold at a fixed and invariable rate. bis central bankers ’ speeches the further evolution of human societies and their economic and political systems introduced great innovations in the monetary area. the development of commercial banks, the credit system and central banks were crucial moments in the economic progress. central banks, as public institutions mandated to issue and circulate the currency, originate from earlier times. the first examples of central banks, closer to today ’ s perception of the central bank, date back to the 17th century in england or sweden. these institutions, originally with a clear commerce orientation, were responsible for the issue of currency and servicing the state needs with loans or lending for different purposes. the modern central bank originates from the 20th century, and the us fed served as a model for a number of other central banks. the attribution of the supervisory and regulatory functions of the banking system and the orientation of the central banks ’ mission in terms of economic objectives, like low inflation or stable economic growth, marks the starting point of central banks at their present form. the latter have played a primary role in the further progress of monetary systems. fixed - rate convertibility to physical metals was found problematic in the economic and monetary management. the great economic depression of 1929 – 1932 clearly showed that monetary policy, designed as an opportunity for public authorities to affect the amount of money in circulation and its price, or the interest rates, is a valuable instrument to mitigate economic fluctuations. beginning from the 20th century, the issued banknotes and coins lost their convertibility into gold at fixed and invariable rates. the issued currency, from this moment on also referred to as fiat money, derives its value from the state ’ s obligatory force. however, this is only half of the picture. the most important aspect determining the value of