ardian fullani : monitoring of the economy to be conducted not only in the metropolis but in the regions as well article from mr ardian fullani, governor of the bank of albania, published in the ekonomia newspaper, 21 january 2005. * * * our economy has long ago been integrated in a continuous process of quality and quantity development, including an increasingly wider geographical expansion. both communities, bank and business, need to cooperate more closely with each other. in order that this cooperation becomes more efficient, we deem, as bank of albania, to play our active role not only through establishing a safe macroeconomic environment, but also by providing a range of other operations that will encourage lending activity of the banking system from one side and impact a more correct tendency of business toward more reliable projects and investments, on the other side. to this end, we estimate in our short - term and medium - term programs to give our regional branches spread throughout the country a different role from the one they played till now. we deem appropriate it ’ s time now for our branches not to be simply cash storerooms and distributors. also, we shall try to renounce some operations of non - central banking nature, which gradually shall be absorbed by commercial banks. our goal is these branches be changed into an advanced model of the bank of albania presence throughout various regions of the country. they will become genuine stations of information gathering about the economic and financial activity of the region, being preceded by further analyses and studies. this research work will serve not only to a more explicit monetary programming but also to the modernization of transmission elements of this policy from the higher authority to the lower authority and vice versa. i estimate that this initiative of the bank of albania to monitor the economic activity not only in the metropolis but also in other regions of the country would be of particular interest for all the interested groups. further, i would like to add some other comments on the latest developments of the banking system, which i deem have created good premises for a real expansion of this business, an expansion that will positively impact on the performance of business activities. after completion of the real time gross settlement ( rtgs ) system, the bank of albania inaugurated some times ago the initiation of a very important project on the automated electronic clearing house ( aech ). the operation of this new system will considerably increase the payment speed for the customers, knowing that the lack of this element has maintained businesses far from banks. i take this opportunity to make

sector. verified performance of economic activity at home and the information filtered from indirect indicators have shifted downward our basic projections for the economic performance for the rest of year. this shift reflects the materialisation of some risks around the previous basic projections, being expected and factorised in our scenarios. the domestic economy is expected to slow down during the rest of year, being conditioned by the weakening of the domestic and foreign demand. given the consolidated fiscal behaviour and the slowed foreign demand, the performance of the private domestic demand will determine the economic activity growth. however, its two components, consumption and investments, have not shown any recovery signal so far. expected developments at home and abroad result in a contained balance of inflationary pressures, determining a slow increase in consumer price in the future. the demand growth bis central bankers ’ speeches below the potential of the economy in the upcoming period will continue to exercise low inflationary pressures. at the same time, the pressures generated by supply - side factors appear contained. based on the insofar developments of the determinant factors of inflation and the projections for their development in the future, with 90 % probability, inflation will range within 1. 0 % – 3. 3 % band after 12 months. * * * based on the analyses of the information set out above, the supervisory council holds that pressures on consumer prices at home remain low over the monetary policy relevant horizon ; they have been, however, on the downside over the recent months. on the demand side, below - potential economic growth will continue to generate low inflationary pressures, while shocks from the supply side are expected to be moderate. the expected developments in economy and inflation imply that the simulating nature of the monetary policy will be retained during the period ahead. the bank of albania remains heedful to future developments and new information, ready to respond in the appropriate time and extent in order to comply with its legal mission. at the conclusion of discussions, the supervisory council decided to decrease the key interest rate by 0. 25 percentage point, at 4. 0 %. this decision aims to establish the appropriate monetary conditions to comply with the inflation target in the medium run. the monetary policy, also, provides the necessary support to simulate the aggregate demand. bis central bankers ’ speeches