perfectly appropriate for institutions to consider alternative funding strategies to meet customer demand. on the one hand, choosing to meet loan growth through wholesale funding rather than attempting to attract new money market accounts, for example, may avoid a costly rate hike on existing deposits. on the other hand, institutions should consider the costs of choosing wholesale funds in lieu of building the institution's retail funding base. significantly, the accumulated effect of these decisions on an institution's risk and liquidity profile may not be noticed until difficult times place pressure on the institution's ongoing funding. management should keep in mind that the value of the federal subsidy provided by lower - cost insured deposits is rarely appreciated until periods of crisis, when a stable funding base cannot be maintained at any price. management should ensure that complex funding products are well understood, especially those with embedded options that cause cash flows to change dramatically depending on market conditions. the funding products should also be consistent with the portfolio objectives of the bank and the sophistication of the bank's risk - management system. in addition, management should seek to identify liquidity pressures and other risks through stress tests so that appropriate contingency funding and hedging programs can be formulated. it is important in this market to place the liquidity and core deposit erosion at both small and large banks, as well as the resultant increased reliance on managed liabilities, in a proper historical context. an unpleasant fact is that the wider range of choices for near - deposit substitutes, and broader understanding by consumers of what those choices are, may have decreased, perhaps permanently, the share of core deposits funding assets. this change may be as significant in the current banking landscape as the tax on state bank notes was in the nineteenth century. to be sure, the imposition of the tax was sudden, while the erosion of the share of funding from core deposits has been, and presumably will continue to be, gradual. but just as state banks responded to the tax by innovating deposit banking to flourish once again, community banks will, i am sure, adjust to the changing realities of the deposit market. moreover, it is also important to recognize that the reduction in portfolio liquidity is more a product of good business - - high loan demand - - than of the relatively slow growth in core deposits. some liquidity pressures will be alleviated as demand for loans declines. though core deposits may be more difficult to attract, they have in fact continued to grow, just not as rapidly as the loan

ardian fullani : imagine the future – for a better economic cooperation. economic chamber ’ s and bank ’ s responsibilities speech by mr ardian fullani, governor of the bank of albania, at the 10th vienna economic forum, vienna, 7 may 2014. * * * dear ladies and gentlemen, dear colleagues and participants of the vienna economic forum, i am honoured and delighted to return and speak to such a constructive and important economic forum, discussing with you the economic development topics, which affect the present and the future of our economies. the topic of this forum is very important for the economies of the south east europe. it creates the proper environment, which enables the examination of the problems faced by our economies during the crises. we can certainly draw few lessons from what we have learned during the recent years, following the global economic and financial crises. these discussions and the harmonization of economic policies will help us to project a strong coordinated economic structure for the long term future of our economies. it is particularly important to converge here in vienna and discus the cooperation issue because one of the obvious outcomes ( lessons ) of the developments during the recent years is that the economic developments in particular for small open economies of the south east european region, are not local or regional anymore. just like the flu, it is rather unexceptional and highly transmittable from one economy to the other, from one sector of the economy to the other. most importantly, european economies and their financial systems, among which the austrian financial system enjoys a significant share of the market, define the globalization for the region and are, to a large extent, important determinants for the success or failure of these economies. given the large share of the european financial groups, they have and will play an important role in the transmission of global shocks in the region. what is more important, they have a significant role in the transmission of legislative and regulative shocks carried over by european monetary and supervisory authorities. the size is such that even a simple change in the future business plans of a single european financial institution can transform into real shocks for the economies of the region. it became evident during the crisis and afterwards that an increase in risk and uncertainty, led to increased incentives for banks to withdraw from the emerging europe economies. though this was mostly prevented due to increased cooperation through institutions such as the vienna initiative, the concerns from our perspective have not completely dissipated. in this respect the business plan of eu based groups can play a potentially important role in the