equilibrium level, the household sector could no longer pay off the accumulated debt. what were the consequences? an extreme and constrained adjustment of consumer behaviour and approach. households could no longer pay their debts to banks and maintain the same level of consumption. these individual imbalances altogether appeared in a macro level, mainly in the form of abrupt fall of demand, slower economic activity and depreciation of the exchange rate ( us dollar depreciation ). naturally, the financial system could not escape from being affected by this challenging contagion. what i have stated above points out the necessity of making thorough analysis at a micro level in addition to the macro ones. that is, the recipes for attaining a stable macroeconomic situation should begin and be sustained by prudent analyses at a micro level. it is for this reason that i would like to dwell on and explore one of the indicators that affects the structure and modelling of household budget. i refer here to workers ’ remittances which have played a key role in smoothing consumption and at a lower level, meeting investment needs, mainly for real estates and small household businesses. remittances have somehow offset the low productivity and the negative effects triggered by unemployment. in addition, they have helped to preserve financial stability, by establishing more balanced ratios between income and expenditure. given the importance of workers ’ remittances, one would rightly raise the following question : what is their perspective? how can they be managed more effectively? for a relatively long period of time, they have been vital to our country. according to a bank of albania survey on the first quarter of 2008, about 26 % of albanian households living in the territory of the republic of albania are recipients of remittances from abroad. households ’ geographical distribution indicates that 59 % of recipient families live in the rural areas while the rest in the urban ones, receiving about 66 % and 34 % of total workers ’ remittances, respectively. remittances represent the most important component of rural families ’ monthly income, accounting for about 40 %. the largest part of workers ’ remittances ( about 70 % ) for the first quarter of 2008 was used for non - productive purposes. about 48 % was used for consumption, which entails meeting households ’ everyday needs for food, clothes, furniture, etc., 16 % for construction and reconstruction and 10 % for education and medical purposes. around 19 % of remittances are used for investment and savings,

quality of banking supervision, this mechanism has the potential to facilitate cooperation between home and host countries, hence fostering cooperation between the european central bank and central banks in the region on financial stability. dear participants, the common challenges that lie ahead of us are numerous and should be solved within a short period of time. on behalf of the bank of albania, i would like to assure you that we will continue to be in close contact with the european central bank and eurosystem central banks, furthering our existing open and sincere communication. approximation with best eu central bank standards and practices is a crucial process for a central bank not only for the effective discharge of the duties, but also for the efficient and stable functioning of the financial system, and benefit of the economy, overall. i am confident that the implementation of this project will be characterised by the cooperative spirit between the bank of albania and central banks in the region, on the one hand, and the european central bank and eurosystem, on the other. i would like to conclude with a heart - felt appreciation and gratitude for all the stakeholders having an active role in the launching of this project : • the european central bank for coordinating all the activities ; • member central banks for providing a large number of experts to assist us with the project implementation ; • delegation of the european union in tirana for funding it. bis central bankers ’ speeches we highly appreciate the commission ’ s assistance with regard to adopting the implementation of the european union legislation and are seriously committed to continuing with the successful cooperation, established with the delegation in the last twinning project. in this context, i would like to reiterate my message that the road to european union integration passes through regional integration. the financial system and central banks spearhead this process. we expect that public and private economic agents will determinedly follow this step we are taking. in my view, regional cooperation can and should serve as a forerunner to european integration. lastly, my special thanks and highest appreciation for mr. mersch for the fruitful cooperation between our institutions during his mandate as the governor of the central bank of luxembourg, and now as an executive board member of the european central bank and, above all, as a friend of ours. thank you for your attention! bis central bankers ’ speeches