long term. the bank of albania sticks to the opinion that the public finance consolidation should anchor to an effective and transparent fiscal rule. this rule would increase the short - term flexibility of public finances and reduce the fiscal adjustment cost. second, the overall economic and financial stability is a prerequisite for a rapid economic growth. the monetary policy has been and will remain oriented toward meeting our inflation target. in line with the cyclical situation, this policy has provided its stimulus through the key interest rate cut and ongoing liquidity injection into the banking system. we have also revised the banking system regulatory basis from the viewpoint of easing it, in order to stimulate lending by the banking system. i avail myself of the opportunity to reiterate that the banking system remains profitable, liquid and well - capitalised. safeguarding the stability of this system will always be on our focus. bis central bankers ’ speeches third, reducing uncertainties and risk premiums in the economy is an important priority. as i have already stated, these uncertainties stem, to a great extent, from the foreign market, but a part of them stems from the albanian economy. without intending to make a list, i will mention just a few : • reducing informality should be a primary objective. besides outflows in public finances, informality brings hidden costs in terms of diminishing competition, inefficiency in terms of lack of balance sheet transparency, and artificially increased financing costs to businesses. • fostering the financial system infrastructure protection is another aspect deserving attention. the bank of albania signed and has already made effective a cooperation agreement with the people ’ s bank of china, which also provides for the possibility to obtain liquidity in case of need. an important step in this regard is the agreement between the deposit insurance agency and the european bank for reconstruction and development to increase the deposit insurance coverage. we deem that there is room for other agreements with international financial institutions specialised in providing funds and assistance. establishing collective public protection releases the financial system and businesses from setting up individual protection. besides, it may be transformed into a necessary source of funds for the albanian economy. • improving the business climate further and observing the contract enforcement. the business climate is a rather complex issue, but i would highlight two issues here. first, the payment of deferred budget liabilities as a priority. in spite of the financial cost, it is an important step for easing the debt burden in the economy and signalling the political willingness to guarantee

contrary, it would undermine the long - term sustainability of fiscal positions and thereby weigh heavily on future growth. public finances in europe are already characterised by a large sustainability gap. future pension obligations in most countries are several times higher than the explicit debt burden revealed in the national accounts. by a very rough calculation, it would, for example, take germany three and a half years ’ output to honour its combined explicit and implicit debt. if future generations are to handle this sizeable burden - in germany as well as elsewhere - there is, first, no way of getting around a tough course of fiscal consolidation, which has to be augmented, second, by coherent policies to lift growth potential - as agreed on in the lisbon agenda. i appreciate the fact that, last year, germany directed its attention to structural reforms in the spirit of the lisbon agenda - even if this was driven more by the “ push ” of persistent economic stagnation than by the “ pull ” of the lisbon vision. under the federal government ’ s “ agenda 2010 ”, labour market flexibility has been improved in terms of the institutional framework, collective wage bargaining agreements and working hours. reforms in the social security systems have been enacted and will help to contain the implicit debt burden. among the remaining tasks, priority status should be given to untying the link between labour costs and social security and to raising the statutory retirement age. 5. concluding remark stability and growth go hand in hand. the lisbon agenda and the stability and growth pact complement each other in lifting the eu ’ s growth potential. both are needed and we should not say goodbye to either of them.