to their own customers. my emphasis on the word “ own ” is not incidental. in developed markets, banks do not offer products and services to their customers unless they have conducted due diligence on the customer in terms of kyc / aml framework. while in the emerging markets, we have certain relaxed kyc norms for ensuring financial access to the unbanked population, if we have to give a significant push to retail ( mass ) banking, we would need to not only know the customers, but also their business and risks associated with their business. evolution of banking 5. in the developed markets, banking over the years has evolved through following three distinct phases. these three phases broadly coincide with the level of development in the real economy in the respective jurisdictions. ( a ) initial phase : during this phase the banks were primarily engaged in offering the basic intermediation service i. e. provision of savings facilities and credit for productive purposes and also facilitate payment services including remittances ( b ) intermediate phase : apart from providing the services offered in the initial phase, the banks additionally moved into lending for consumption purposes. the banks also started offering certain para - banking services like insurance etc. the demand for such services arises primarily on account of a transition of the economy from an investment ( production ) led growth phase to a consumption led growth phase. at this stage of development of the economy and the society, retail banking becomes relevant. ( c ) advanced phase : apart from providing the services offered in the intermediate phase, the banks have additionally started providing high - end savings & investment products, wealth management products, and structured products to both individuals and corporates. in other words, in this phase, the banking system additionally starts supporting the speculative activities over and above for the production and consumption activities. private banking, an advanced version of retail banking for “ classes ”, becomes relevant at this stage. what is retail banking? 6. let me pose a fundamental question to you all – what is retail banking? the answer to the question might sound all too obvious, but let me tell you, there would, perhaps, be as many different perceptions about this as the number of participants here. why only here? i have observed that across the globe also there is no clear understanding about the ambit of retail banking. therefore, before we head into the issues proper, i would also like to define bis central bankers ’ speeches “ retail banking ” and draw an outline of its ambit to ensure that all

ardian fullani : overview of albania ’ s latest monetary and economic developments and outlook speech by mr ardian fullani, governor of the bank of albania, on the monetary policy decision of the bank of albania ’ s supervisory council, tirana, 30 may 2014. * * * today, on 30 may 2014, the supervisory council of the bank of albania reviewed and approved the monthly monetary policy report. after discussing the recent economic and monetary developments and their outlook, the supervisory council decided to lower the key interest rate by 0. 25 percentage point, to 2. 50 %. the key rate decrease aims at creating more favourable conditions for inflation to return to our target in the medium term. the decision reflects our assessment and projections for low inflationary pressures in the quarters ahead, in response to the weak aggregate demand and the downward trend of inflation in albania ’ s trading partners. this move contributes to boosting domestic consumption and investments, aiming at a fuller utilization of production capacities and a faster return of inflation to our target. ( let me now proceed with an overview of economic developments and key issues that were discussed at today ’ s meeting. ) * * * annual inflation rate was 1. 7 % in april, slightly down from the average rate recorded in the first quarter of 2014. in the last months, the dynamics of inflation have been largely determined by the performance of food prices. the added volatility of inflation for these items, over the past months was in response to structural changes in the domestic market and the downward trend of inflation in regional markets. prices of other items in the basket continued to give low contributions. in spite of the volatility, medium - term inflation trends remain clear. the overall economic and monetary environment is characterised by weak inflationary pressures, reflected, in turn, in low core inflation rates. the analysis of macroeconomic factors shows that aggregate demand remains weak, maintaining economic activity below its potential level. the unutilized productive capacity led to low increases in employment, wages and production costs. supply - side inflationary pressures remain weak, owing to the downward inflation in our trading partners, low primary commodity prices and stable exchange rate. inflation expectations remain subdued and close to bank of albania ’ s inflation target. regarding economic activity, recent data corroborate our earlier assessments for positive growth rates in the first months of the current year. aggregate demand increased due to the positive performance of domestic private demand, while the public sector ’ s contribution was negative. foreign demand continued to grow