ardian fullani : press conference at the presentation of the first financial stability report of the central bank of the republic of kosovo speech by mr ardian fullani, governor of the bank of albania, at the presentation of the first financial stability report of the central bank of the republic of kosovo, pristina, 20 december 2010. * * * dear mr. gerguri, dear members of the governing board of the central bank of the republic of kosovo, dear mr. yilmaz, dear guests, it is always a great pleasure for myself and my colleagues to come to the central bank of the republic of kosovo. i would like to express my positive consideration that this institution is now well - shaped and is growing stronger at a stable and rapid pace. this development is an outcome of the clear vision of the governing structures and the commitment of the central bank ’ s staff in implementing the best standards relevant to the area. this time i am invited to testify another achievement of this institution, the first release of the financial stability report. i have the conviction that the public authorities, economic operators in kosovo and the public will appreciate the contribution of the central bank with respect to the identification and management of risks facing the financial system ’ s activity. in my speech i will first provide a general assessment of the great deal of importance given to financial stability issues and the central bank ’ s role in this regard. then i will share our experience at the bank of albania with the institutional approach to financial stability assessment function. the global crisis, which originally emerged as a financial system crisis, very soon transformed into a real economy crisis. due to the high integration of financial markets as a result of the presence of financial institutions engaged in cross - border activities and the manifold interinstitutional exposures, a financial system crisis can spread rapidly across many countries. on the other hand, due to the exceptional role in financial intermediation, a financial system crisis may hit the real sectors of the economy, placing the economic mechanism in a negative spiral that tends to reinforce itself. these developments will likely result threatening to the sustainability of the entire financial system and be followed by severe social consequences that are costly to public wealth. this two - year experience triggered an accelerated identification process of the mechanisms and measures that aim at preventing and handling similar situations in the future. at a broader economic context, these measures aimed at reforming the international monetary framework and reduce imbalances in the global macroeconomic framework. g - 20 policy -

the pace of change in the size of the portfolio, the albanian banking sector continues to lend. to illustrate my point, only in 2018, the banking sector has granted new loans amounting to around eur 1. 1 billion ( equivalent ) to fund business investments, house purchase and consumption. the second moment pertains to the responsibility and the diligence of the banking sector vis - avis lending. as the administrator of public savings, responsibility and due diligence in lending are non - negotiable conditions. measures undertaken to bolster the short and medium - term development of albania should not run against its financial stability in the long term. yet, in coherence with my observations above, i judge that the banking sector should pay more attention to lending. this judgement is based on two theoretical premises and is enabled by an important precondition. first, a more proactive approach to lending is beneficial for the sustainable and long - term development of the banking industry. low return on assets is one of the problems facing the banking sector in albania, in the region, and beyond. such low rates of return – which in albania are induced also by ample foreign currency liquidity and will continue to be favoured by the reduction trend of the public debt and domestic borrowing by the government – increase the vulnerability of the sector to shocks. against this backdrop, the banking sector should increase its orientation toward lending as an instrument to enhance asset profitability and boost its longterm stability. in the same vein, leaving potential sectors or clients outside the focus will push them to turn to other segments of the financial market. this implies less income for the banking sector not only in the form of less income from lending, but also in the form of less income from other products in the package of services that banks offer to clients. second, a more proactive approach to lending is beneficial for the sustainable and long - term development of the albanian economy. our analyses, based on the available information and the bank lending survey for albania suggest a divergence in the pace of improvement in loan demand and supply. while this divergence does not seem to have, as of yet, a substantial impact on 2 / 5 bis central bankers'speeches lending, if it deepens further it will jeopardise the performance of credit and the pace of economic growth. in this light, i would like to underline that a series of studies, both at home and abroad, emphasise the fact that the albanian economy would