as a whole, however, the value of cash in circulation as a proportion of gdp is just over 10 per cent. the equivalent figure for sweden is 1. 1 per cent ( source : bis and the riksbank ). 1 that central government – in the form of the central bank – also continues to play an active role on the payment market in the future. what is money and what is required for it to function? when the human race moved from subsistence to conducting trade, the need for some kind of instrument of payment soon arose. barter is inefficient, as it is not easy to find a counterpart who not only wants the goods or services you can offer but is also willing to give you what you want in exchange. possibilities for trade are thereby highly restricted. 2 this problem has been solved by various cultures around the world with the use of various forms of money. for example, some island cultures used seashells as money. history tells us that money can be absolutely anything that a group of people in a region have decided will act as money. it is, quite simply, a social convention, more or less in the same way as an alphabet is an agreement over how a language should be written. 3 money works, therefore, because everybody accepts the convention. so which conditions need to be met for the convention of money to be accepted by everybody? many people have pondered this question over the ages, leading to a definition of money that goes all the way back to aristotle. 4 put simply, it could be said that the conditions are met when you can trust that you will be able to pay with money to purchase what you want and that money ’ s value or purchasing power will not be undermined if you want to use it later on. it involves all prices being expressed in the same unit, usually called a unit of value, in exactly the same way as we need a standardised way of measuring distance. money also has to have a stable value ( money must be a “ store of value ” ), as this makes it possible to postpone consumption. it also needs to be accepted by everybody. it must be easily accessible and easy to use ( it must act as a general means of payment ). for a long time, the most common form of money was coinage issued on royal authority, with its value being determined by its metal content. in sweden, the copper standard was introduced at the start of the 17th century, in addition to the silver

period, which will be based, above all, on meeting without conditions of a very important requirement of any aspiring country, which has to do with the central bank independence. the institutional and documentary approximation to practices on which the ecb is based and operates will be the main principles of the boa agenda. 3. improving the monetary policy and operational framework from the viewpoint of operational monetary policy framework, the bank of albania is a relatively advanced institution, but the same consideration may not be valid concerning its transmission mechanism. significant improvements are required for the development of banking and financial markets. so, we may mention : the development of lending to economy, especially in lek, thus creating a better extension of operations according to demand, and reducing the transactions in cash. 1 / 2 in the function of market development, positive tendencies are expected in the future, in terms of increasing competition and banking intermediation efficiency. concerning cash reduction in economy ( money outside banks ), the boa is not going to work in campaigns but will be led by a more active philosophy in terms of encouraging banking products, completion of clearing systems, use of credit cards not only for payments but also for general services and particularly for utilitarian ones. the identification of factors impacting on inflation and the magnitude of this impact remains an important element, thus creating possibilities for a more accurate inflation forecasting. an important role in this direction will be played by improvement of research and information abilities and the system of statistics within the bank, which will also be subject of discussion by the boa representatives in this meeting. we may mention here the establishment of an institute of scientific research of the bank of albania, with a regional dimension, that will impact significantly on raising the standards. concerning price stability, the necessary institutional framework of the bank of albania, the independence, credibility, accountability and transparency should be ensured and strengthened. dear participants, the above issues constitute some main pillars, which will create a real approximation of the bank of albania to european system of central banks. on the other hand, i am convinced that todaya€™s meeting will be a concrete step in this direction. wishing the successful continuation of this workshop, i express once more my determination to lead the integration process of the boa towards escb. 2 / 2