aspects of its implementation. against this background, the bank of albania has been committed to a process of constant evaluation of the interbank market performance and at the same time fine - tune its monetary policy regime. the monetary policy document for the 2009 – 2011 period was a major step in this regard. in this document, the role of monetary aggregates as indicators of inflationary pressures in economy and as intermediate targets of monetary policy was complemented with a wide range of information provided by the real sector of the economy, which is systemized and finalized in the inflation forecast performance. this change was entirely based on the albanian experience. the development of money markets and progress in financial innovation, the rapid growth of lending and dollarization of the economy, and the increasing role of real estate in the investment opportunities caused the functioning of the albanian economy to become even more complex. they were supplemented with unstable velocity of money circulation hence toning down the short and medium - term link between monetary aggregates and inflation. this change materializes the modernization of monetary policy decision - making based on a more complete information analysis that aims at managing the market operators ’ expectations. one of the directions the bank of albania ’ s work has been focusing on during the past year, as we have transparently stated in our monetary policy document, was the assessment of the suitability of operational targets and the adoption of more advanced forms. the quantitative targeting of the bank of albania ’ s balance sheet, in the form of a ceiling on the net domestic assets and a floor on the net international reserves, has for quite a long time acted as a guide to our interventions in the interbank market. in spite of that, the abovementioned developments suggest that there is plenty of room for improvement in this philosophy and practice. targeting the interbank market interest rates seems a practical option that finds ample theoretical support and whose application has proved successful in a number of advanced economies. broadly speaking, this operational philosophy is guided by the need to steer the short - term interest rates in the interbank market close to the key interest rate set by the monetary authority. as such, it serves better to keeping the short - term horizon of the interest rates ’ curve under check, making the conduct of monetary policy more transparent and providing clearer signals for the economic activity. steering our operations to the stability of interbank market interest rates will serve to a more relaxed functioning of the interbank market and lowering of risk premiums. in addition, this operational target is well - framed in

. i trust straight opinions and recommendations shall be brought forth, be they challenging to be accomplished. according to theory, inflation targeting is a direct regime. the central bank forecasts the forthcoming inflation performance ; this forecast is then compared to the targeted inflation rate ; and the difference between the forecast and target determines the proper adjustment of the monetary political instrument. but, unfortunately or perhaps, fortunately, this relatively new monetary regime is not the rescue solution of a central banker ’ s affliction. i am confident that the honourable participants who are speaking during the three days of the seminar, shall enlighten in more details, based on the experiences of the central banks they represent, the complex issues and challenges they had to encounter, while adopting this regime. the agenda of this three - day seminar seems promising, and the interweaving of theory and practice is outstanding. it begins with the theoretical considerations on inflations targeting, proceeds with the three main pillars of monetary policy communication : independence, transparency and accountability. not by accident, the new approach required by the inflation targeting regime has been defined as the “ forecast path ”. the distinguished economists from the centre of central banking studies shall introduce us to the econometric techniques, which come to help during the inflation forecast process. to conclude, the czech national bank, shall bring the experience of an economy in transition adopting this regime. and last but not least, on behalf of the bank of albania, i would like to thank the centre of central banking studies ( bank of england ) for the opportunity granted to the institution i govern, to cooperate 1 / 2 and to consent the holding of this regional seminar in our country. this activity is the first in its kind, and i express my highest considerations for the trust that the bank of england has put to the bank of albania. the centre of central banking studies is internationally recognised as a centre of intellectual excellence in the area of central banking studies. considering the goal that this centre has set to itself, as an opportunity provider to central banking employees to be endowed with ampler perspectives in the respective areas of expertise, i call for your attention to listen to what the distinguished experts shall say. their professional achievements and the central banks they represent guarantee this. thank you and good proceedings! 2 / 2