viewpoints, professionally and personally. we do live in a global society, where financial developments take place at a rapid pace. therefore, central banks should possess strong and reliable mechanisms of coordination and communication, which may prepare our institutions to cope with such situations. a proverb says : “ no matter how long the journey is, one has to take the first step to start off. ” this philosophy was made concrete through this twinning project, which along with the assistance in the afore - mentioned areas, was also the first step on the path of our institution to eu standards, as one of the priorities of the stabilization and association agreement. i would like to extend my sincere thanks to the banca d ’ italia and the banque de france for the outstanding cooperation we have had during the project implementation. i commend the efforts of both honoured institutions and hope that the successful implementation of this project will provide us with an example to involve more in such initiatives in the future. also, i want to extend my thanks to the delegation of the european union for its ongoing assistance and prudence throughout the project performance. i am deeply confident that these are only the first steps towards a close cooperation. i would like to conclude by bringing to your attention a statement of mr. shimon peres, who, listening to his advisor, agassi, who was speaking about developing alternative oil sources in the absence of oil, interrupted him by saying : nice speech, but what are we going to do? in light of this, we should think about what to do in the future. i think that the political coverage of this approximation process is important, with which i mean brussels ’ probable acceptance of albania ’ s application for membership in september. this is an important step that would provide additional room for the country ’ s rapid convergence and for bank of albania ’ s rapid and irreversible development in line with the models of its european counterparties. bis central bankers ’ speeches

of correcting foreign trade balance and reduce its influence on the economic growth for 2011. in the aspects of macroeconomic policies, these developments suggest that strong stimulating policies for the economy may be buffered by a rapid increase in imports that accompanies the increase in domestic demand. in the structural aspect, these developments reiterate the need to continue with structural reforms, which should orientate the albanian economy towards a more stable development model and a higher competitiveness in global markets. among other things, these reforms, should aim at establishing a favourable climate to attract stable capital flows as in foreign direct investments or long - term capital inflow. a further increase of aggregate demand enabled the albanian economy to move closer to its producing potential, yet remaining clearly under - utilised. consequently, decreasing pressures on inflation continued to be present even during the second half of the year. average annual inflation was 3. 1 % in the first quarter of the year, dropping by 0. 4 percentage points from its average level of the third quarter and getting closer to bank of albania ’ s target. during 2010, inflation was influenced by increased administered prices, rising trend of basic goods prices, food products and oil prices in international markets, and underestimating tendencies of the exchange rate. annual inflation increase to 3. 4 % in december was due to increased agricultural products prices, reflecting this increase in global markets. yet, anchored expectations on price stability and disinflation pressures by the real economy balanced the action of the above - mentioned factors of demand on inflation, halting their transition to second round effects and stable inflation pressures. the bank of albania considers that the inflation rate is expected to range within our target of 3 per cent, during the entire year. the increasing effect on the inflation of supply factors is balanced by the negative output gap and existence of non - utilised capacities in the economy. controlled inflation pressures and fiscal policy created space for a gradual increase of the monetary stimulus in the economy during 2010. the supervisory council of the bank of albania decided to reduce the key interest rate by 00. 25 percentage points in july, taking it to the lowest historical level of 5. 0 %. in parallel with this move, the bank of albania supplied the interbank market with the necessary liquidity for a proper functioning of financial markets. in the operational aspect, a change of form of our objective in june served to a better orientation of banking system refinancing with liquidity, resulting in a liquidity premium reduction in the