have supplied the banking system with the liquidity it needs for smooth operation. finally, through the review of regulatory norms and application of a prudent supervision of the banking system, we have managed to establish a stable financial environment for the country ’ s long - term development. boosted confidence of the public in the banking system was followed by rapid increase of bank deposits, thus reducing reliance on foreign short - term financing. all these initiatives, coordinated with other policies, have proven effective. inflation remains subdued and in check, inflationary expectations are anchored, macroeconomic environment is steady and financial stability is consolidated. looking ahead, the bank of albania holds that the albanian economy will continue to face the above - cited concerns over 2013 and beyond. although improving, economic activity is expected to remain below its potential, followed by low inflationary pressures, creating premises for maintaining stimulating monetary conditions in the future. likewise, our bis central bankers ’ speeches projections suggest that external balances of the economy are expected to improve. on the other hand, slow economic growth rates may generate pressures on debt stability indicators, unless they are identified and taken into consideration in fiscal policy decisions. in bank of albania ’ s view, growth rate recovery will require combining the cyclical stimulus of the economy with structural measures that expand the growth potential. regarding the cyclical aspect, the bank of albania holds that macroeconomic policies are rightfully stimulating. in the absence of space, fiscal policy should continue to be oriented towards long - term stability of debt indicators. the monetary stimulus is expected to be transmitted more completely in the upcoming period. we continue to underline our message that businesses and consumers should have a more realistic approach on sound perspectives for the country ’ s development as well as revise up their consumption and investment plans. in the structural aspect, we welcome reforms and initiatives that contribute to the country ’ s growth potential, through developing infrastructure, improving the legal framework, enhancing productivity and competitiveness of the albanian economy, attracting foreign investments and maintaining and improving macroeconomic stability at home. the bank of albania is fully committed and engaged in the latter. our key focus will continue to be : maintaining price stability and establishing pre - requisites to step - up financial stability. therefore, we are convinced that we are providing a valuable service to long - term economic growth and welfare. bis central bankers ’ speeches

of albania finds that the fiscal policy has been on a consolidation path during in 2016, reflected in the reduction of the public deficit and public debt. although it has injected a weak stimulus to the economy, the consolidating fiscal policy has facilitated the accommodative monetary policy pass through, by reducing the risk premia in the economy, favouring the reduction of financing costs, and increasing the space for lending to the private sector. according to reports from the ministry of finance, for the first time after six years, the public debt was reduced from 72. 7 % of the gdp in 2015, to 71 % in 2016. the bank of albania has been and is certain in the position that efforts for reducing public debt should continue. the functioning of the monetary policy pass through mechanism, and factors contributing to or preventing it, are an integral part of the work of the bank of albania. research efforts in 2016 aimed to assess the ability of the tools used for generating economic projections at the bank, as well as the understanding of the functioning of monetary transmission vis - a - vis the current challenges in the financial system. in this context, i would like to point out that the bank of albania has identified two main obstacles in the monetary policy pass through mechanism, whose solution requires broader - scale cooperation. the first obstacle relates to the high level of non - performing loans. to reduce this risk, a national action plan for reducing non - performing loans has been drafted, and is currently underway. the second obstacle relates to the high level of euroisation in the economy, which creates potential risks in the financial system and renders the monetary policy pass through more difficult. preparing a plan for reducing euroisation in our economy is a joint commitment by a number of authorities and the bank of albania is in the process of identifying measures that may be taken in this regard. amid a complex and challenging economic and financial environment, the coordination of the monetary, micro and macro - prudential policies assumes primary importance in promoting monetary and financial stability. in 2016, the bank of albania has worked with the same intensity in all three aspects, aiming at an optimum calibration for them. following, is an overview of our work for maintaining and promoting financial stability. 3. promoting financial stability and sound lending in accordance with its mandate and institutional responsibilities, the bank of albania is jointly responsible for safeguarding financial stability in albania. it communicates its assessment on the financial stability regularly, and coordinates its policies with other institutions