and, of course, the banking system. in my capacity of governor of the bank of albania i would like to ensure the banking community that the institution i govern is open for an institutionalised co - operation with the banking system by channeling it through the albanian association of banks. we have a great consideration on this association and we hope that its role will further be enhanced in the future, particularly on the principled topics that will characterize the development of the banking system and that of the financial system in general in the years to come. honored bankers, i hope you share the same opinion with me that we become recently witnesses of a qualitative development of the albanian banking system. i use the opportunity to express that positive assessments on the banking system have been given also in the report prepared by the world bank and international monetary fund after the completion of their assessment made on the albanian financial system ( fsap - financial system assessment program ). of course, this is good news. conclusions of fsap, of this important international passport, are an indication of our earliest conclusions that the albanian financial system is characterized by a supervised and effective banking system and by other segments that are still in the first development stages where regulation and supervision remain a priority. regardless of what i mentioned above, sincerely feeling myself as a part of the banking system i would envisage that it needs better and faster motivation to reach higher contemporary standards in all the aspects of the banking activity. the banking system has experienced remarkable developments recently. after the licensing of popular bank, with albanian capital, the number of banks increased from 15 to 16, and a preliminary license is granted to union bank ( albanian capital ), which is expected to raise the number of banks to 17 over 2005. the system assets have further increased by 14 percent while there was an increase of banking products and an expansion of their network. during this year there will be sold the public shares of both the italian albanian bank and united bank of albania, which will lead to an increase of effectiveness and banking competition, paving the way to the processes of selling, merging and acquisitions towards a new consolidation of the banking system. the lending activity increased by 38 percent where one can distinguish, inter alia, the significant growth of medium - term and long - term loans compared to short - term loans. the map of coverage of the country with the banking system has further expanded, including new areas ever covered before. at the end of 2004, the total number of branches reached 88

countries where reference is made to oecd member countries is a bit confused and another time, a list of 29 members is presented, while collateral in cash is not taken into consideration as a deductive element in the calculation of weighted risk assets. concept of mortgaged credits that are weighted by 50 percent is very restrained and subject of confusion. it is proposed : to take into consideration the observations and submit a draft - decision for changing the regulation. regulation “ on market risk ” it is proposed : to review it in the framework of new recommendations of basel ii. focusing again on the problem of banking supervision i would like to underline that we, bank of albania as a supervisory institution, are determined to have at a possible maximum level a simple and easy supervision for being implemented, associated with a significant improvement of the on - site inspection. we shall intend that expectation and prevention power of our supervision gains new dimension. to this end we are in a process of finalising the negotiations with european partner institutions for launching a twinning project for the further consolidation of supervisory capacities of the bank of albania. anti cash campaign recent developments have impacted cash reduction in the economy. on the other hand, we have carried out an intensive public activity, of clarifying and promoting nature where meetings of another nature were held too, in which we, all of us as a banking system, have been concretely engaged. allow me to remind you the meetings we have organized with business and utility services business and also that on the primary market of treasury bills. using this opportunity i would like to bring again to your kind attention the problems raised even beforehand. i hope that now, on the eve of finalising the automated electronic clearing house project, each bank separately and the association itself are seriously thinking to raise the profit level from this facility that bank of albania offers in this moment. i would appreciate if from the association will have some comments or potential reactions on the system preparations and the possible assistance and co - operation of bank of albania in this direction. after the completion of this project, i deem that we must think more seriously about the numerical and qualitative addition of electronic payments. for this purpose i would envisage to start thinking from now about future projects in the payment infrastructure. i personally will insist that even in this direction all of us as a banking system look forward to the european union directives, in order that each future step is oriented toward the country integration in the european union. few times ago, i have