ardian fullani : overview of albania ’ s latest economic and financial developments speech by mr ardian fullani, governor of the bank of albania, on the monetary policy decision - making of the bank of albania ’ s supervisory council, tirana, 25 july 2012. * * * today, on 25 july 2012, the supervisory council of the bank of albania reviewed and approved the quarterly monetary policy report. based on the analysis of albania ’ s latest economic and monetary developments, and following discussions on their performance outlook, the supervisory council of the bank of albania decided to decrease the key interest rate by 0. 25 percentage point, taking the one - week repurchase agreement rate to a new historical minimum of 4. 0 %. this decision reflects the supervisory council ’ s opinion that the further eased monetary conditions in economy are adequate to meet the inflation target in the medium run. simultaneously, the eased monetary conditions will provide a further incentive to the economic activity at home, by increasing the monetary stimulus to support the domestic demand. let me now proceed with an overview of the economic and monetary developments and key topics discussed at today ’ s meeting. * * * during the first half of 2012, the albanian economy continued to maintain the parameters of macroeconomic and financial stability, against an increasingly challenging global context. consumer price inflation, budget deficit and public debt indicators, balance of payments and financial situation of the banking system were stable or improving. in particular, the albanian financial sector remains well - capitalised, liquid and able to conduct its intermediation role. during this period, the albanian economy experienced some shocks on the supply side, with structural movements in the domestic financial markets, and a slowed domestic and foreign demand. these developments drove the fall in gdp in the first quarter of 2012 and made difficult the implementation of stabilising policies on the aggregate demand. the albanian economy is expected to record positive growth rates as tensions may be reduced in the second half of 2012. average annual inflation marked 1. 9 % in the second quarter of 2012, increasing by 0. 8 percentage point compared to the first quarter of 2012. the gradual rise in consumer prices has mainly reflected the increase in unprocessed food prices, whereas prices of processed foods and those of non - food consumer goods lowered their contribution to inflation during the second quarter of 2012. the other categories in consumer prices basket showed a serene performance, and were characterised by low inflation rates. within the macroeconomic context, consumer prices continue to reflect weak inflationary pressures,

high levels, which is worth for an in - depth analysis. the world bank survey conducted in 2016 concluded that the reasons for the limited use of the banking channels are the high costs on money transfers and the perceived cumbersome and complex procedures. to illustrate my point, according to this survey, the costs of remittances toward albania are estimated at 9. 4 per cent of the amount sent, compared to the 7. 2 per cent average in the region. we are all aware that the more financial channels are used, the more finances penetrate in the economy. moreover, the increase in the use of financial channels contributes to enhancing financial inclusion, increasing the opportunities for savings and productive investments. taking into account the benefits from the formal penetration of remittances in the economy and the insofar contribution to the banking and financial sector, the bank of albania suggests added 1 / 2 bis central bankers'speeches attention with regard to reducing transfer costs and improving or designing afresh products and services / targeted to this segment of the population. from its side, the bank of albania is engaged to further modernise the payment system infrastructure and align the legislation to the eu directives for an open, barrier - less, and competitive market. in the last two years, the bank of albania has been engaging in concrete projects with the world bank, related to remittances and financial inclusion. the first project consists in an assessment of the compliance with the “ general principles for international remittance services ” designed by the world bank and the bank for international settlement and a concrete action plan, with many stakeholders involved, to comply with those fields that need further improvement. another noteworthy project is the greenback of the world bank dedicated to remittances, implemented in several countries across the world. this project comes now to albania as a receiver of remittance and aims at enhancing the efficiencies in the market for remittances and raising the awareness and financial education, and has bank of albania ’ s endorsement until its completion. the other project consists in assessing the compliance with the criteria set out in the framework of the “ payment aspects of financial inclusion ”. by complying with the criteria from the involved stakeholders, it aims to increase the number of households and enterprises ( mainly the small ones ) that have a bank account or a payments account to conduct various transactions. in addition to the above, for a broader review of the remittances across all its dimensions, the bank of albania