bank supervision. in particular, we have highlighted the need to adopt more strenuous capital and liquidity standards on account of the higher volatility of our economic environment. i have just received an invitation from andrew crockett for the idb to cooperate with the financial stability forum in raising awareness in our region of the international standards that have been developed and to promote the discussion of the implementation issues that would arise. it is a pleasure for me to announce here that i am delighted to accept this invitation to cooperate in this issue of common interest. countries are also very interested in finding ways to further strengthen their financial systems, to the point that many of them would like to have the opportunity to participate more actively in the development of new ideas and standards. as you can imagine, more participation in the elaboration process would greatly facilitate the productive discussion of the implementation issues of the forum ’ s international standards that i have just mentioned. this issue of participation is critical in the case of reform of the credit risk capital rules to ensure that it addresses the needs of all global market participants. the regulatory capital framework must be drafted with a view to its implementation in emerging markets as well as advanced markets, which requires more intensive and effective participation by emerging market regulators in the drafting process. it is my hope that latin american banking regulators will be involved in finalizing the regulatory capital rules in the next and final round of consultation starting, i understand, in january 2001, so that we are not surprised by the final standards. as i already mentioned, there has been a solid response on the part of countries concerning the two underlying factors of financial strength : macroeconomic stability and domestic reforms of prudential regulation and supervision. you will find a very receptive ear to ideas to further strengthen the countries ’ financial systems. but we need to recognize that domestic protection is limited and costly. for example, countries in latin america hold huge amounts of international reserves with a significant carrying cost at current rates and no clear stabilizing effect. in fact, there is the fear that the very use of the reserves may signal weakness and prompt an attack. many countries in the region follow prudent policies such as stringent bank liquidity requirements, or long debt maturities, or controls on short - term capital inflows, but none has been spared from financial contagion. it is clear that the systemic problems that threaten growth and stability in latin american countries require systemic solutions, so the key question is : how is the

ardian fullani : recent economic and monetary developments in albania speech by mr ardian fullani, governor of the bank of albania, at the press conference on the monetary policy decision of the bank of albania supervisory council, tirana, 29 june 2011. * * * today, on 29 june 2011, the supervisory council of the bank of albania reviewed and approved the monthly monetary policy report. based on an analysis of albania ’ s latest economic and financial developments and following discussions on their performance outlook, the supervisory council of the bank of albania decided to leave the key interest rate unchanged at 5. 25 %. the supervisory council holds that the actual monetary conditions are appropriate for meeting the inflation target and for continuing to stimulate the economic activity. let me now proceed with an overview of economic developments and main issues discussed at today ’ s meeting of the supervisory council. * * * annual inflation pointed to 4. 2 % in may, remaining close to preceding months levels. under higher foreign prices pressure, the prices of “ processed foods ” and “ non - food consumer goods ”, including oil, were the main contributors to inflation rates. in the meantime, the seasonal effect of increased domestic supply of fruits and vegetables is reflected in a lower contribution of the “ unprocessed food ” to inflation. the rise of some administered prices and the effect of higher excise tax rates for some goods continued to provide a constant, but positive, contribution to annual inflation. inflation ’ s performance over the recent months was consequent to the balance of two main factors ’ opposite actions. on the upward trend, high primary commodity and raw materials prices in world markets were transmitted to the domestic inflation in the form of higher imported inflation. in the short run, this phenomenon also contributed to core inflation, which was up compared with last year. high net inflation rate of non - tradable goods showed that a part of higher commodity prices materialised in second round effects in inflation. latest developments in inflation affected also the economic agents ’ inflation expectation, which, however, remain within the target band of the bank of albania. on the downward trend, domestic economy developments continued to provide an environment with contained inflationary pressures. our assessments on economic activity suggest positive growth rates for the first quarter, although below the potential. under these circumstances, the albanian economy continued to be characterised by spare productivity capacities – labour and capital – and negative output gap, continuing to exercise downward pressures on inflation. similarly, the monetary development analysis confirmed the presence of contained monetary