economy. in order to fulfil its mission, it drafts and implements independently the monetary policy and monitors and regulates the financial market activity in general and that of the banking system in particular. also, the bank of albania is an important and active actor in the country ’ s efforts for european integration. let me further make a brief presentation of bank of albania ’ s work throughout 2008. bank of albania ’ s monetary policy and operations the bank of albania ’ s monetary policy is drafted and implemented exclusively in view of fulfilling its primary objective, i. e., achieving and maintaining price stability. inflationary pressures present during the first half of the year and the shaking of agents ’ confidence dictated the pursuit of a prudent monetary policy during 2008. the key interest rate was held unchanged throughout the period, aiming at a better balancing of the demand and supply ratio, and contributing to subduing of inflation expectations in the economy. along with the strengthening of some banking supervision prudential measures for credit risk management, this policy has brought about a more balanced credit growth and has transmitted proper encouragement for consumption and savings. the international confidence crisis in early fourth quarter of 2008 encouraged deposit withdrawals from commercial banks in albania, highlighting lack of liquidity in the banking system. it was reflected in raised interest rates, slowed banking activity in the money market. the bank of albania intervened in the monetary market by injecting liquidity, in order to cover the banking system needs for liquidity. the dynamics of 2008 events required the usage of all open market instruments and modification of some of them. the bank of albania has injected liquidity of a weekly, monthly and quarterly term. it has increased securities basis that may be used as collateral and has reduced the upper limit of interest rate corridor of its operations. also, in order to better satisfy the banks ’ needs for liquidity, the bank of albania changed the main auction type, from fixed - amount auctions into fixed - price auctions. also, the bank of albania has induced more flexibility to banks for short - term liquidity management, by raising the quantity of the daily required reserve usage. all these operations have served for settling down the liquidity situation and attenuating its impact on interest rate rise. they have also prevented balance sheets of commercial banks from contraction and have been reflected in enlargement of bank of albania ’ s balance sheet. banking regulation and supervision year 2008 coincided with an upward prudence of supervisory policies of the bank of albania. the

ardian fullani : the albanian economy and the banking sector in 2010 speech by mr ardian fullani, governor of the bank of albania, at the reception of the albanian association of banks, with bankers and representatives of banks operating in albania, tirana, 17 december 2010. * * * dear bank executive managers, dear participants, it is always a pleasure to meet once the year - end approaches to make a summary of events that characterized the albanian economy and the banking sector over the course of 2010. the albanian economy is forecast to grow in 2010 slightly higher than in 2009. industry and services provided the largest contribution to the positive economic growth, yielding as well a relative improvement in the balance of payments ’ current account. lek ’ s exchange rate was more stable compared with the preceding year, whilst consumer prices fluctuated within the bank of albania ’ s target of 3 %. fiscal policy engaged in a process of fiscal consolidation during the present year, which we consider as critical in order to preserve the budget deficit and domestic debt levels and keep the level of interest payments in check. developments in the financial system attest to the full recovery of public confidence in the banking system. as at end of the third quarter of 2010, total banking sector assets accounted for 81. 7 % of gdp, up 12. 2 % y - o - y versus merely 0. 9 % in the same period in 2009. deposit growth and higher capital account provided the major positive contribution to the expansion of banking sector activity. deposits have grown by 18 % y - o - y, out of which more than 2 / 3 of this figure represents foreign currency - denominated deposit growth. banking sector treasury and interbank operations declined versus the same period in 2009. liabilities to non - residents have dropped by 32 % y - o - y. concerning the composition of banking sector assets, we note that lending has grown by 8 % on a yearly basis. the annual growth rate of lending has been constantly downward in the last couple of years. banking sector and interbank operations have grown by about 25 % on a yearly basis. banking sector investments in non - resident assets increased by 53 % y - o - y. net profit was positive and substantially higher than in the same period in 2009. return on assets and equity stood at 0. 6 % and 6 %, respectively. capitalization and liquidity figures were at adequate levels. capital adequacy ratio was estimated at 15. 7 %, while liquid assets accounted for