of the techniques. stress - testing, used separately and together with other techniques, is a valuable tool in verifying the endurance of our financial institutions and financial system. in the bank of albania, we have a lot of interest in knowing your experiences. hence i would encourage you to provide this workshop with your real examples. i believe you will also enjoy tirana, a city that is changing quickly, even for those who live here. you will understand a little more about this country and its people, and this could prove as interesting as to make you wish to come back again. last but not least, i would like to thank the international monetary fund, mr driessen and his colleagues, for supporting and developing this joint workshop in tirana and for providing their valuable theoretical and practical expertise. thank you and enjoy.

to some elements that remain a work in progress. i hope that our experience might be of some use to authorities in many emerging market economies, which are now developing their own local - currency markets. and their efforts are bearing fruit – the outstanding stock in these emerging economies'local bond markets now exceed $ 4 trillion us – a four - fold increase in value over roughly the past decade. i'll also consider how these domestic markets can fit into, and do their part in stabilizing, the global financial structure. now, these are my personal observations which are based on 40 years experience in public finance, and as seen from two perspectives : both as a central banker, and before that, as a federal finance department official. over the years, i've come to appreciate that a sound local - currency government bond market helps on three distinct policy fronts. first is the discipline that it can impose in terms of macroeconomic policies. second, it supports economic and financial efficiency. and third, it helps in the development of a stable financial system. let me now deal with each of these points in turn. in terms of macroeconomic policy, a government must build credibility with its own citizens first of all. citizens need comfort that the government bonds that they hold will keep their value ; that governments won't default on their obligations, or resort to large tax increases or inflation to ease the real burden of repayment. this initial hurdle of building credibility can be difficult to get over, as many emerging markets can attest to today. but once this hurdle has been cleared, a well - functioning, localcurrency government bond market brings with it the incentives for authorities to keep in place the sound policies that i mentioned in my introduction. those policies should include monetary policy aimed at maintaining low, stable, and predictable inflation, which leads to an environment of lower interest rates – both nominal and real – and lower debt servicing costs in the future. they also include prudent fiscal policies, which then reinforce public confidence in the government and, in turn, in the domestic markets. of course, none of this suggests that all government borrowing must be denominated in the local currency. there will be times when a government will borrow in foreign currency, perhaps for projects that will support a future flow of foreign currency that can, in turn, help repay this borrowing. the real risk here comes when governments find themselves repeatedly borrowing in foreign currencies, to finance current domestic spending. let me now mention