will make all efforts to ensure and further consolidate the general macroeconomic equilibrium in albanian economy, with specific role on financial stability. i believe that business community comprehends this important mission. bank of albania intends to be vocal regarding its prospects for economic developments, so that none of its actions should come to you as a surprise. therefore i invite you to interpret our signals fairly and smoothly integrate them into your decision making process. i would like to remind you that our medium term agreement with imf and focused policy orientation toward eu and european exchange rate mechanism ( erm ) provides additional collateral for our pledge. thanking the economist conference for giving me this opportunity i am open to take questions and share comments.

began to manage their exposures to operational risk separately and as a comprehensive practice comparable to the management of credit or market risk. by the late 1990s, it became increasingly clear to leading banks and their supervisors that the original accord no longer provided meaningful measures of risk for the most sophisticated banking organisations. as a result, the basel committee and others began to discuss ways to revise the existing capital rules to account for these advances. supervisors sought more than a simple revision of the existing framework. we wanted to align our capital requirements more closely with the best measures of economic risks that banks actually face. we sought furthermore to fortify the stability of the banking sector so that banks could continue to serve as a source of credit through good years and bad. in our view, promoting financial stability will benefit not just banks, but also other businesses and consumers as well. to incorporate the latest advances in risk management, and to develop a more forward - looking approach to supervision, the committee embraced a “ three - pillar ” approach to capital requirements. rather than simply setting out a static minimum requirement for capital levels, the new capital framework will rely on three mutually reinforcing policy approaches. they consist of, first, risk - sensitive minimum requirements ; second, a more consistent system of supervisory review ; and, third, enhanced transparency and market discipline. each of these three pillars offers unique benefits on its own, but the real strength of the three pillars stems from their ability to complement each other. the first pillar - which specifies the minimum capital requirements - constitutes a very direct approach to supervision. by applying a uniform set of rules to banks, the first pillar adds transparency to the regulatory process. applying a shared set of rules to all banks makes it easier to compare organisations and get a sense of their relative degrees of solvency. on a technical level, the committee based the measures of risk on the advanced practices that banks are adopting. the rules reflect the evolution in credit risk management by allowing qualifying banks to rely partly on their own estimates of the drivers of credit risk to determine the amount of capital required against particular exposures. one such driver of credit risk might be the bank ’ s own estimate of a borrower ’ s probability of default. similarly, the new capital rules will reflect the advances in operational risk measurement by incorporating an explicit capital charge for such exposures to loss. so the minimum rules will align capital charges more closely to better measures of the actual underlying economic risks that the industry is developing. this is a clear example of