existing loans. these funds available to them have served to mitigate the financial difficulties that both households and enterprises faced at the beginning eve of the crises. overall, our estimations suggest that our simulating monetary policy has yielded a positive effect of 3. 7 percentage points on the economic activity during the last four years, by providing a notable contribution to employment and welfare of albanian households. second, the prudential supervision and monitoring of the banking system performance, the intensive and continuous communication with it, and the temporary suspension of profit allocation, have served to maintaining a liquid and well - capitalised banking system with sound practices for risks management. indicators of assets quality, financial result and capital of the banking sector appear at good levels. non - performing loans ratio has remained at low levels and the direct exposure of its activity to market risks remains contained. third, the increase of operational capacities for supplying cash to economy, the guarantee for the uninterrupted functioning of the national payment system and the reduction costs on electronic payments in lek, enabled the smooth functioning of the financial system. last, the intensification of communication with national and international partners and with public at large, helped to reduce the uncertainty and increase confidence in the future. overall, we assess that the albanian economy has the necessary premises for a fast rebound of the economic activity once the epidemiological situation has been normalised. also, this assessment is affirmed by our forecasts, which project an expansion of consumption and investments, growth of the economic activity ’ s volume, increase of employment and improvement of the financial situation of enterprises and households in the following period. the economic growth will help the strengthening of inflationary pressures and the return of inflation to target within 2022. 2. banking supervision and financial stability notwithstanding the challenges posed by pandemic in albania, the activity of the banking system was stable. the operational measures taken by banks to ensure the continuity of critical functions and the relationships with clients, intertwined with the measures taken by the public authorities to mitigate the pandemic shock, enabled the financial intermediation activity to continue appropriately and the financial indicators of the banking sector remaining at good levels. 3 / 6 bis central bankers'speeches the activity of banking system grew by around 7 %. although the banking sector undertook a considerable part of financial burden during the crisis of 2020, it resulted with a positive financial result, albeit 15 % lower than in the previous year. in parallel, the capitalisation of the system remains

am convinced that these activation procedures need to be simplified. and the notification and information procedures need to be harmonised and streamlined too. this could be done, for instance, by establishing the esrb as the central information hub for all notifications regarding macroprudential measures in the eu. this would reduce the overall notification burden on national authorities. furthermore, one might think that the authorities were free to choose the tool that they deem best suited to address the risk at hand. well, not quite. with regard to certain macroprudential tools, a rigid sequence has to be followed. you can ’ t implement certain tools without first having considered using other tools. more specifically, if you want to apply tools such as macroprudential liquidity requirements or risk weights to target asset bubbles, you first have to consider tools such as pillar 2 requirements or various capital buffers. this sequence is known as the “ pecking order ” of tools. but an effective and efficient macroprudential framework should permit the flexible use of all available tools laid down in eu law to prevent systemic risk. instruments should be chosen on the basis of their effectiveness, not as a result of mandatory sequencing. the conclusion therefore is that the pecking order should be removed and the activation mechanisms should be harmonised and streamlined. now, as i said before, macroprudential policy is a relatively new field in terms of both theory and practice. so, two things will happen over time : the theory will advance, and we will gain practical experience. against this backdrop, the european macroprudential framework should be reviewed on a regular basis. this would help to make it more effective and more efficient. the current situation but the framework is just a means to an end. and that end is to ensure a stable financial system. so, where do we stand on this front? are there any risks to financial stability in the euro area? we at the ecb currently see four major risks. the first risk is a sudden reversal of risk premia. recent events have shown that markets can be subject to corrections even when the macroeconomic environment continues to be supportive. 4 / 6 bis central bankers'speeches so far, the high volatility in the equity market has not spilled over into other markets, which is certainly good news. that said, some market segments need to be closely monitored. residential real estate is one such segment. prices are broadly in line with the average valuations recorded over recent decades.