##its ) or banks that weren ’ t applying basel 2 requirements ( investment banks which theoretically were regulated by the sec ). by contrast, french banks for example, where supervision was at times branded “ intrusive ”, managed on the whole to get through the different phases of the crisis relatively unscathed. ii ) what rules should apply to finance? • once a consensus had been reached over the need to reinforce financial regulation and supervision, the next question was naturally : what kind of regulation? • the principle that guided the regulators, notably on the basel committee, was that finance should once again be made useful to the economy : that it should serve the economy rather than govern it. • more specifically, the new regulations were guided by five main objectives : i ) to increase the resilience of the banking sector ( solvency and liquidity ratios ) ; ii ) to prevent excessive leverage and maturity transformation ( leverage and net stable funding ratios ) ; iii ) to reduce market risk and increase market transparency ( reform of over - thecounter derivatives, basel 2. 5 on market risk ) ; iv ) to limit systemic risks ( macroprudential rules, identification of and specific rules for systemic institutions, rules for bank resolution ) ; iv ) to fight “ casino finance ” ( rules on the separation of certain speculative banking activities ). • throughout the preparation of the new regulations, the idea was never to suffocate banks with overly restrictive rules. the regulators tried to calibrate the rules in a balanced manner, and took into account the reality of the situations these banks face – and the risk that, rather than limiting dangerous banking activities, the rules might in fact drive banks to shift them into unregulated entities. france, in particular, bis central bankers ’ speeches worked hard to make sure that the “ pendulum theory ” did not mean regulation was set at a level that would prevent banks from continuing to finance the economy. i ’ m thinking of two examples in particular : the improvement of the liquidity coverage ratio ( lcr ) at the start of the year and the balanced choices made by both french and german political authorities on the separation of banking activities. • furthermore, the idea was never to place a ban on financial innovation. you are probably familiar with the words of former fed chairman paul volcker : that the only useful thing banks have invented is the atm. i don ’ t completely agree with this statement ( and, in all likelihood, neither does the man behind it

viewpoints, professionally and personally. we do live in a global society, where financial developments take place at a rapid pace. therefore, central banks should possess strong and reliable mechanisms of coordination and communication, which may prepare our institutions to cope with such situations. a proverb says : “ no matter how long the journey is, one has to take the first step to start off. ” this philosophy was made concrete through this twinning project, which along with the assistance in the afore - mentioned areas, was also the first step on the path of our institution to eu standards, as one of the priorities of the stabilization and association agreement. i would like to extend my sincere thanks to the banca d ’ italia and the banque de france for the outstanding cooperation we have had during the project implementation. i commend the efforts of both honoured institutions and hope that the successful implementation of this project will provide us with an example to involve more in such initiatives in the future. also, i want to extend my thanks to the delegation of the european union for its ongoing assistance and prudence throughout the project performance. i am deeply confident that these are only the first steps towards a close cooperation. i would like to conclude by bringing to your attention a statement of mr. shimon peres, who, listening to his advisor, agassi, who was speaking about developing alternative oil sources in the absence of oil, interrupted him by saying : nice speech, but what are we going to do? in light of this, we should think about what to do in the future. i think that the political coverage of this approximation process is important, with which i mean brussels ’ probable acceptance of albania ’ s application for membership in september. this is an important step that would provide additional room for the country ’ s rapid convergence and for bank of albania ’ s rapid and irreversible development in line with the models of its european counterparties. bis central bankers ’ speeches