this regime will provide a better platform for harmonizing the monetary policy with the fiscal one, implying that the fiscal authority will seriously commit to support the proposed setup. to this purpose, we invite the albanian government to reach a consensus on the key objectives of both policies, monetary and fiscal, adopting the convergence criteria as a strategic goal. success in this endeavour requires albania, among other things, not only continuity on the path of sound macro policies but even strengthening them further. this means a monetary policy focused on maintaining price stability and a prudent fiscal policy which will ensure that albania ’ s deficits and debt ratios are sustainable and at low levels to increase the attractiveness to international investors. put differently pursuing a monetary policy focused on price stability and a prudent fiscal policy, will no doubt reduces albania ’ s risk premium. the benefit of this achievement will be felt throughout the economy. to support my idea i have to tell you one fresh news. yesterday albania succeeded to sell internationally a seven year fixed rate bond in lek. this was not a result of a toss of coin, but a reflection of international confidence in the albanian economy and its macro policies. this confidence should increase in 2008, 2009 and beyond. regardless of the monetary policy regime it is to be said that the chances for this setup to be successful are greater under a developed financial market, which understands properly the monetary policy signals and transmits them adequately to the economy. monetary policy efficiency implies the financial market efficiency. this issue has been part of my earlier discussions ; however i would like to highlight that only recently we have taken concrete steps which will improve certain financial market segments. we have currently tried to adopt a set of measures which will facilitate the reformation process of the financial market by further deepening it. in more concrete terms, the government securities market and the interbank market have been most particularly under our special focus. after several consultations with all actors in place we decided to come up with a package of initiatives and priorities during 2008 whose purpose is to establish incentives and minimize risks in the albanian financial market : - broadening and deepening the base of participants in the government securities market starting from january 2008 we will increase the investors ’ base, eligible to directly invest in the auctions of government bonds. we believe it will increase the competition while so - far this was a privilege enjoyed by the banking system. - reducing the interbank market risk so far, the banking system has applied limits on the amounts it can lend in the inter

ardian fullani : monetary policy strategies for small economies speech by mr ardian fullani, governor of the bank of albania, at the vii annual conference of the bank of albania “ monetary policy strategies for small economies ”, tirana, 6 december 2007. * * * dear ladies and gentlemen, it is a great pleasure to open the proceedings of the 7th conference of the bank of albania. on behalf of the institution and myself i take this opportunity to welcome all participants. i am confident that the following two days will instigate debate and discussion on key central bank issues. this year ’ s main topic will focus on the classical function of a central bank : “ monetary policy ”. institutional framework, decision making process, monetary transmission efficiency and other issues related with financial markets, macroeconomic and financial stability, will make interesting topics of discussions from our esteemed speakers. i am confident that our panellists are well - known senior experts ; therefore, on behalf of the institution i would like to thank them heartily for accepting to share with us their views and findings. given that the proceedings of the conference will extensively cover theoretical models and countries experiences as well i would like to briefly present the evolution of our central bank during the last three years. to our pleasure the enhancement of analytical and modelling capacities of the albanian institutions has been widely recognized yielding a greater ownership in our medium run economic and financial development programs. since the beginning of transition most of these programs have been designed and implemented under the setup of imf conditional support programs. even the current policy setup is designed under such program. we currently believe this is the final one which gets imf financial support, implying that our economy is matured and that albania is on the right track. after many hardships of transition, the albanian authorities should have full ownership in the medium - term development programs of our country. this is the reason why the bank of albania has quite for long been engaged in a comprehensive process of scrutinizing and choosing the best options. the year which is coming to an end marked another important chapter in this context. in contrast to the previous two years, the bank of albania has further deepened its cautious research of all aspects characterizing the present and future of monetary policy. it has been quite for a long time that the central bank has publicly announced its efforts in assessing objectively and professionally the future of the bank of albania monetary policy. these were not sporadic efforts but part of a process which initiated three years ago with the only objective