ardian fullani : bank of albania – progress during 2006 speech by mr ardian fullani, governor of the bank of albania, at the “ round table on target inflation 2 ”, tirana, 8 december 2006. * * * ladies and gentlemen, i want to conclude this round table by thanking you all for your contributions. we are really happy that you came to tirana for discussing the monetary policy strategy of the bank of albania. this round table on inflation targeting was an excellent follow - up of the open forum. at the open forum last year in december we globally discussed the many preconditions for inflation targeting. during these two days of the round table, yesterday and today, we went far deeper on these complex issues. these issues need to be solved before the bank of albania can put a fully fletched inflation targeting regime into place. at this round table we have discussed the progress that the bank of albania has been making during 2006. one of the discussed topics was the econometric modeling and forecasting. the bank of albania uses now a reliable analytical framework that provides information useful to the monetary policy decision making. under inflation targeting more information would be needed about the expected inflation developments in the future. as laid down in the central bank law, the primary objective of the bank of albania is to achieve and maintain price stability in albania. for keeping prices stable we need to be able to forecast the development of prices in the future. our current econometric models provide us information about these future developments. our internal studies show now that the bank of albania is able to make reliable forecasts. we also discussed the consequences of situations where the consumer price index increases, let us say, more than 3 % at an annual basis. this may for instance happen due to higher electricity prices, or higher oil prices. these energy prices are a main share of our daily expenditures. therefore, they are a main share of the total basket of consumer prices for the “ average ” albanian household. however, the focus of our discussions was the analyses of the further impact on the albanian macro - economy. higher prices will lead to a lower purchasing power. households will buy less in case of a price increase, under the condition of unchanged household income. then, if many households in albania start consuming less, the albanian economic growth will suffer. the albanian production will slow down due to the overall lower demand for goods and services. this process can take some time. but, anyhow, each economist will agree that

##d since 2008. currently, albanian citizens own 1, 433, 151 debit and credit cards of the prestigious visa and mastercard companies, which have implemented standards from the best at international level ; significant increase of poss in albanian businesses by around 6 times from 2008 ( about 300 poss ) to 2023 ( about 19 000 poss ) ; 2 / 4 bis - central bankers'speeches currently, there are around 230 businesses equipped with the necessary infrastructure for e - commerce, from a total of 3 in 2013, when it was introduced for the first time this service from the banking system ; the number of bank card payments has increased 83 times since 2008. in 2023, the albanian citizens have carried out an average of 11 payments per capita, from 0. 3 payments per capita in 2008 via bank cards. as we reflect on the past years, despite the various domestic and external challenges, we can say that - despite the shocks on inflation and monetary tightening over the last few years, both in albania and in the euro area - the bank of albania and aab have continued to work for : drafting and approving many legal and regulatory acts in accordance with the european directives and best practices in the field of regulation and micro - and macro - prudential supervision, resolution, payments, statistics, etc. ; continuously modernizing the payment system, establishing and developing payment schemes, such as direct debit, as well as the increase in the use of electronic payment instruments, etc ; building cooperation bridges and improving communication with domestic and international institutions to help the financial sector in albania ; organising many events and programs to educate the public, promoting financial inclusion and reducing the use of cash in the economy. * * * dear colleagues, banks play a key role in the economic structure of albania. we have a common mission : bolstering a strong financial and economic environment, which continues to remain challenging. forward - looking and due to global changes and developments taking place, the bank of albania : remains committed to fulfilling its legal objectives, always implementing policies aimed at safeguarding the monetary and financial stability of albania, as a prerequisite for the sustainable and long - term development ; encourages the further increase in lending to albanian businesses and households, always requiring for compliance with the prudential requirements, but at the same time insisting on increased attention to specific sectors or vulnerable groups of the society ; has encouraged and will encourage the drafting of policies and the adoption of instruments that expand financial inclusion for those segments of