challenges, the bank of albania managed to keep the cpi inflation within the target. let us dwell on these elements further. 1. 1 economic growth the global context that accompanied albania ’ s economic and financial performance over the past year was not at all favourable. the year 2009 featured contracted global economic activity as a result of the economic downturn in advanced economies and considerable economic slowdown in emerging countries. global economy posted the first negative growth rate of the last 50 years. the increasing integration of the albanian economy and the financial system in particular caused the global crisis to be reflected early in our country. the main channels the albanian economy was exposed to were : decline of exports ; decline of remittances and other foreign currency inflows ; increased uncertainty in the financial institutions ; and, in response to the latter review of almost all economic agents ’ business plans. this impact was reflected in low growth rates and shaking of some macroeconomic balances in 2009. according to the statistics institute, gdp grew 3. 1 percent in annual terms in 2009. the slowdown of gdp growth reflected the contraction of activity in industry and construction, while the services sector ’ s value added remained the key contributor to economic growth. given the difficult circumstances in which economic activity took place and compared with other regional countries ’ experiences, the preservation of the economic growth rate at positive levels is an encouraging development. however, its slowdown and the new macroeconomic balances need due attention by all economic agents in their projections for the future. albania ’ s economic development outlook also requires greater support from the private sector, while the contribution of the public sector to economic growth is expected to decline. the data on aggregate demand show that the contraction of private consumption and the fall in investment were determining factors in the slower growth of demand at home. net exports continued to provide a negative contribution to aggregate demand in 2009, however at more moderate rates than in 2008. in addition to easing monetary conditions, the fiscal stimulus supported the economy in generating positive growth rates during 2009. private consumption is the key component of aggregate demand accounting for about 80 percent of gdp. the slow growth rate in wages, the decline of remittances and the contraction of consumer loans contributed to the slowdown of consumption in 2009. private investments are assessed to have been affected more by the global financial and economic crisis than the other components of aggregate demand. the contracted domestic and foreign demand and the tight lending conditions triggered the contraction of private investment in 2009. 1. 2 fiscal policy and

risk - oriented supervision. the main highlights of this new supervisory policy are : further interaction and harmonization among monetary policy, financial stability and supervision ; harmonization of our supervisory framework with the acquis communautaire ; interaction between the domestic and foreign supervisory authorities and the financial supervisory authority ; harmonization with the third pillar of basel ii, encouraging the process of self - regulation and consumer protection. the bank of albania has been constantly engaged in a process of deep analysis and supervision of the legal and regulatory framework compliance and enforcement from the licensed entities. this process has been achieved through on - site inspections, which in 2009 were more frequent and rigorous. besides the observance of the supervisory cycle, banks were constantly contacted for phenomena that have represented a concern during the year, taking appropriate measures to address potential problems in due time. overall, the banking system has acted with caution in conducting the operational processes of their activities and in compliance with the regulatory framework of the bank of albania. 2. 3 strengthening of regulatory and supervisory framework the design of strong and appropriate rules and their rigorous monitoring constitutes a guarantee for the preservation of financial stability. the bank of albania has been active in improving the regulatory framework, consolidating it further in compliance with the legal provisions and the basel committee principles, the european council directives and the best practices in the area of regulation and supervision of financial institutions licensed by the bank of albania. the main objective was the harmonization of the best practices in : strengthening internal control ; improving banking institutions ’ governance ; strengthening the risk management capacities ; and increasing the level of banks ’ transparency to the public. with respect to the latter, the bank of albania has required higher and improved communication of the banking system with the public about the products and services being provided, the promotional campaigns for new products and the provision of information on their real financial situation and risk profile. 3. other bank of albania activities after the analysis of the two key functions of the bank of albania, i would like to elaborate on some other aspects of the central bank ’ s work. 3. 1 payments ’ system the payments ’ system reflected security and efficiency in 2009. on average, 225 transactions a day were processed and settled in the aips system, with an average daily value of all 19 billion. total liquidities settled in the aips system during 2009 is about 4. 3 times higher than the gdp. 3. 2 european integration the bank of albania plays a key role in the european integration process. the