the reduction of exposure, i will bring an example from albania. last year, the largest eu - based bank operating in our country decided to contribute to meeting the group ’ s required capitalization levels through reducing its exposure to the albanian government securities by almost 3 % of the gdp, within a very short period of time. apparently, a more coordinated approach to implementing these requirements, implying the presence of non - eu host countries at an early stage of macroprudential decision making at the eu level, would contribute to a less painful absorption of the subsequent effects in our countries ’ financial systems. to address the pressing issues facing home and host country relations in this context, the vienna initiative was relaunched as “ the vienna initiative ii ”. it focuses on fostering homehost authority coordination to support stable cross - border banking, and help protect the economy from disorderly deleveraging. as a member of the steering committee of the vienna initiative ii, i have underlined the need for a more effective home - host coordination, promoting albania ’ s position as a host country. given the geographical proximity and high exposure to recent developments in the eu bis central bankers ’ speeches financial markets, i am confident that our countries would significantly benefit from developing a regional perspective on risks and opportunities arising from such developments, and major supervisory reforms at the regional level. in this context, albania ’ s membership in the steering committee of the vienna initiative, and the working group on banking union and emerging europe is a solid foundation to build upon and synthesize the common concerns of our countries vis - a - vis eu authorities. allow me now to summarize the insofar position of the bank of albania, articulated in the framework of the vienna initiative ii, and propose a number of discussion topics, which i am confident will lead to a fruitful exchange of views today. the bank of albania has called for effective mechanisms to restore healthy lending to the economies of non - eu countries, where systemic subsidiaries of eu banking groups operate. in this context, eu authorities and eu banking groups should provide their active contribution. this is not merely a short - term objective, but rather an important anchor for the region ’ s economic recovery with significant effects on both the economies of the region and the banking groups, which have declared their commitment to our region. we are currently witnessing a period of massive reforms in the eu supervisory architecture, with the establishment of the banking union. these reforms correspond to the reactivation of the vienna initiative ii, hence

##80bn in notes and coins – effectively claims on the bank of england ( banknotes ) and the crown ( coins ). there is another £470bn of state issued money, but it is not in general circulation ; it comprises the deposits that private banks hold in their ( electronic ) accounts at the bank of england – the claims on the bank of england that banks exchange to settle transactions with each other. for instance, before the arrival of the spanish colonist, the incan economy functioned without a formal form of money. instead, incans were required to work a number of days per year on public projects and in return the state provided them with all they required in terms of food and materials, leading to little to no trade within the domestic economy. ancient mesopotamia did not have a circulating currency as its means of payment - coinage only appeared around 2000 years later. instead these civilisations had a system of ledgerbased accounts of mutual debits and credits, typically denominated in terms of agricultural commodities. only the bank of england issues banknotes in england and wales, but seven commercial banks in scotland and northern ireland can also issue banknotes, the total value of these notes in circulation is £7bn. the seven banks must, by law, set aside assets that are worth at least the value of all of the banknotes they have in circulation. this ensures that people with genuine banknotes issued by the seven banks receive a level of protection similar to people who have genuine bank of england banknotes. all speeches are available online at www. bankofengland. co. uk / speeches the remaining 97 % of the money held and used by the public takes the form not of notes and coin but of claims on the private banks in which we all store our money in payment accounts. when we use a plastic card, a cheque, a bank transfer – as we do for over 95 % of the £7½tn of transactions by value every year in the economy – we are exchanging our claims on our banks. this is sometimes called ‘ private ’ money as opposed to ‘ public ’ or state issued money. that is in my view a rather misleading description, for two reasons. the first is that these claims are denominated in sterling, the ‘ unit of account ’ in the uk, the common measuring stick of economic value that we all accept, that is governed by the bank of england under the authority of parliament. the bank ’ s monetary policy committee is