the medium run, the macroeconomic policies should be prudent in terms of public and private savings level, in order to control the need for using foreign financing resources. the fiscal policy during the first half of 2009 had an expansionary stance, being featured by a rapid growth of expenditures and budget deficit. budget revenues have recorded a more moderate growth, partially reflecting even the economic slowdown effects. though remaining within the projected level for 2009, the budget deficit by about all 30 billion constitutes a much higher amount than in the same period of the previous year. under these conditions, the bank of albania would appreciate the taking of measures for keeping budget deficit levels and public borrowing in check, helping the maintaining of the internal and external balances in the economy. preserving the projected budget parameters will impact positively on macroeconomic stability, by controlling the fiscal stimulus on aggregate demand and dampening the pressures on monetary markets. the demand for monetary assets increased during the last months. money supply rise by about 8 percent is based on money creation in the economy from the public sector and from private sector borrowing, mainly in all. loan portfolio grew moderately, by all 7. 5 billion or about 5 times less than as of the same period of the previous year. reduction of bank funds source and increase of uncertainty in the country influenced the significant deceleration of credit growth rates. however, credit to economy increased along the first months of the year, while the banking system has signalled no further tightening of the lending terms in the third quarter of the current year. the private sector ’ s demand for lek - denominated loans is faced with an increasing willingness from banks, thanks to stabilization of liquidity situation and easing of monetary conditions at start - 2009. restraint of foreign currency money supply has resulted to contraction of foreign currency component of money structure, even on the demand for money side, bringing about shifting of money supply structure towards the lek. in the first half of 2009, the financial market situation was influenced by increased uncertainty and revaluation of risk premiums that associated the liquidity constraint, consequent to deposit outflows and lending activity reduction. ongoing intervention of the bank of albania in the money market, combined with measures that aimed at relaxing the market and encouraging the interbank market activity, as well as the maintaining of sound financial system indicators, made the end of the period record stabilization of liquidity positions and of interest rates. the latter displayed different behaviour, according to maturity term. short - term

##ystem will discontinue the production and issuance of € 500 banknotes. the elimination of the largest - denomination banknote is hoped to have an impact in limiting the underground economy and making all kinds of illegal transactions more difficult. its use in ordinary transactions has not been large in any case. some people have been disappointed by this decision, and interpreted it as a sign that the ecb is taking a more negative view on the future of cash in general. this is a misinterpretation. the decision should not be overdramatized. for a comparison, in the u. s. the $ 100 bill is the largest banknote. the ecb is not taking a radical step in discontinuing a € 500 banknote. at the same time the new series of € 200 and € 100 notes will be introduced to meet the all the demand. there is no change in our attitude on the future of cash. * * * to conclude, cash has never been more interesting than now. increasingly, the central banks and the whole society need analyses which go to the foundations of the monetary and payments system. i trust this conference will make a valuable contribution to this fascinating research area. i thank you for your attention, and wish you a very productive conference day. bis central bankers ’ speeches