percent during the cold war. that tells us that this time the potential costs of fragmentation are much higher. let's have a look at the channels through which fragmentation impacts the real economy and financial stability. from an economic viewpoint, an increase in geo - economic fragmentation can be seen as a negative supply shock. such a shock has a downward effect on economic growth and an upward effect on inflation through increasing trade costs. fragmentation in the form of increasing trade restrictions leads to higher import prices, market segmentation and reduced access to technology and knowledge. cost estimates of trade restrictions vary widely. but we do know that they are particularly high in the case of barriers to technology diffusion and disruptions in global value chains. the imf estimates that trade fragmentation could reduce global gdp volume by up to 7 % over time. and as we know, countries that rely more on international trade are particularly susceptible to trade fragmentation. another transmission channel of fragmentation is inflation. international political tensions make inflation dynamics less predictable. an example is the current situation in the middle east. an escalation of the conflict could trigger a spike in commodity prices that could impact price stability. a quite prominent case is the attacks by houthis on cargo ships in the red sea. some shipowners have decided to send their ships on the much longer route around the cape of good hope. obviously, this disrupts global value chains and raises transportation costs. these are the types of events that inflation 2 / 4 bis - central bankers'speeches models do not take into account. this makes inflation less predictable and it makes the job more difficult for central bankers. fragmentation does not only impact the real economy and inflation. it also impacts financial stability. first of all, weaker growth and higher inflation make it more likely that banks and other financial institutions will incur credit and market losses. restrictions on the flow of capital and investments limit the ability of financial institutions to diversify their portfolios. fragmentation is also associated with a more challenging cyberthreat landscape. state actors have become more active in this area, and geopolitical conflicts have become more hybrid. perhaps the most important way in which fragmentation impacts financial stability is when we cannot find each other any more in important cross - border challenges. and there are many such challenges. during the global financial crisis, policymakers around the world were able to respond swiftly and effectively. this was possible thanks to good relations among public - sector financial decision makers and solid institutional structures that had developed over the years. after

long term, economic growth is determined only by the structural reforms and the degree of competitiveness of our economy vis - a - vis our trading partners and the global market. on the other hand, the duty of the fiscal and monetary policies is to avoid short - term deviations of the economy from this long - term trend and create a sustainable environment for the country ’ s economic and financial development. the albanian economy has already started its journey towards integration with the european union. the ultimate goal of this process is to improve the economic welfare. it also implies to fully integrate with the trading, industrial and financial chains ; adopt a unique economic management philosophy, a unique regulatory and institutional practice ; and acknowledge the harmonised rules of the game applied throughout the european area. in this context, i would like to highlight two key moments : first, the european integration process should be our strongest anchor for structural reforms : legal, regulatory, institutional, infrastructural, or political ones. albania has still a long way to go and the peculiarities of our economy provide the necessary space to calibrate these models in accordance with the comparative advantages and primary needs of the country. however, i believe it would be useful to have all the reforms integrated in a unique vision of integration. second, the albanian businesses should do a lot more to hasten the integration process. it should be more active to adopt advanced technologies, and production and management processes. likewise, the albanian financial sector should be more visionary in its policies and priorities about the distribution of financial resources, and work harder to attract more foreign investments and build bridges of cooperation with local businesses. we have rightly underlined that regional cooperation is a necessary move that should precede the european integration process. the economies of the region are small compared bis central bankers ’ speeches to our trading partners, but the establishment of unified zones in terms of customs duties, legal systems and practices, integration of financial practices and development policies provides the right incentives to attract foreign investments and empower our negotiation capacities with international partners. * * * concluding, i would like to reiterate that the bank of albania considers the economic and financial stability of the country as a prerequisite for sustainable and long - term development. now, this is no longer a theoretical matter of disciplining the behaviour of politics towards the economy, nor is it a discussion on respecting the equality of generations. it is a bitter lesson learned from the latest crisis and a tangible reality for many countries of the