. the banking system continues to be well capitalised, with sound financial parameters. but, the banking system ’ s lending continues to reflect the private sector ’ s weak demand for funds, resulting from the downward credit demand and added prudence by banks when lending. * * * new available data support our assessment for gradual growth of the economy in the quarters ahead. the transmission of the monetary stimulus, payment of arrears by the government to businesses, and improvement of confidence are expected to boost consumption and investments in albania. also, the steady recovery of the global economy is expected to boost foreign demand and its contribution to aggregate demand. the albanian economy, however, is expected to operate below its potential in the period ahead. below - potential economic growth and low inflationary pressures from the foreign sector are expected to be reflected in low inflation rates, in the short - term period. at the end of discussions, the supervisory council decided to keep the key interest rate unchanged, at 2. 75 %. this policy will help provide the requisites for complying with the inflation target and is consistent with our projections for inflation rates returning within the target band in the medium term. in this context, i avail myself of this opportunity to underline that the bank of albania expects a better response by the banking system with regard to lending. this response should take into account, among others, the positive prospective of economic development in albania and the stimulating policies applied by the bank of albania. based on the available information, the bank of albania deems that expected economic and financial development requires maintaining the easing monetary policy stance in the quarters ahead. bis central bankers ’ speeches

ardian fullani : preconditions for inflation targeting in albania ( closing speech ) farewell speech by mr ardian fullani, governor of the bank of albania, at the open forum “ preconditions for inflation targeting in albania ”, tirana, 1 - 2 december 2005. * * * ladies and gentlemen, i want to conclude this forum by saying first and foremost that we have had two very productive days! it was a great pleasure for me to listen to your views, constructive suggestions and fruitful ideas concerning monetary policy in albania. i thank you very much for all your contributions! at the end of this forum i would like to give my personal views on the road ahead for bank of albania. but i will first put some developments in perspective. since 1990 and until today in 2005, the albanian economy has been transformed from an isolated centrally planned to an open market economy. before 1990 there use to be only a state mono - bank. nowadays, there is a central bank with a network of commercial banks and other financial institutions. in 2000, the central bank began to fully rely on indirect instruments for conducting its monetary policy. as you can see, bank of albania has a relatively short history of central banking. in my opinion, the central bank is moving in the right direction. but time has come to decide how to proceed in the near to further future. this has been the main reason for organizing this open forum. for our country, an ultimate objective is the accession to the european union. accession to the european union implies a full membership. as a consequence, it implies eventually the adoption of the euro after the accession date. eu accession will ultimately induce entering into erm ii, and thereafter adopting the full legal tender of the euro. there will be an automatic adherence to the monetary policy of the european central bank. however, these developments still belong to the future. having this eu - time path in mind, we are aware of the changing world surrounding us. albania as a small and open economy is part of this dynamic world. today, we observe a rapid globalization, liberalization, continuous financial deepening and broadening, with new financial innovations in a always more interconnected world. albania is influenced by these developments on a day to day basis. albania therefore, needs a daily monitoring of new developments and it needs to cope with these international challenges. before reaching the ultimate eu - accession objective in this constantly changing world, there is still a long distance to cross. as it concerns