ardian fullani : brief overview of key topics and the appropriate macroeconomic policy response speech by mr ardian fullani, governor of the bank of albania, at the joint press conference of the international monetary fund ( imf ) mission with the ministry of finance and the bank of albania, tirana, 3 november 2010. * * * dear mr. minister, dear mr. bell, dear media representatives, it is a pleasure for me to appear before you today following a week of intensive and fruitful discussions to present the bank of albania ’ s position. allow me first to underline that the meetings held broadly confirmed the conclusions provided in our last monetary policy report and the bank of albania ’ s outlook regarding its future performance. in what follows i will provide a brief overview of our opinions, dwelling upon the key topics of discussion : current and expected economic developments ; risks and related concerns, and ; the appropriate macroeconomic policy response. the albanian economy had a positive performance in the first nine months of 2010, expressed in positive growth rates and improved key parameters of macroeconomic stability. in turn, the recovery has been reflected in contained and downward inflation rates, improved current account deficit, lower budget deficit and relative sustainability of public debt figures. these developments contributed to fully restoring confidence in the banking system, lowering the interest rates and the risk premiums, enhancing the exchange rate sustainability and improving the liquidity and financial sector ’ s balance sheet indicators. the analysis of economic growth factors suggests that foreign demand for albanian products and services provided the major contribution, while domestic demand remains dampened and continues to suffer the heightened uncertainty about the future outlook and the tighter lending conditions. monetary and fiscal policies have been prudent aiming at creating appropriate conditions for a stable economic development. in practical terms, this has materialized in greater orientation of fiscal policy towards the preservation of long - term public debt sustainability. in the meantime, monetary policy has been more stimulating. as i noted in the presentation of conclusions on the quarterly monetary policy report, this performance is expected to persist in the coming period as well. macroeconomic stability and the improved banking system ’ s balance sheets have created the proper preconditions for inducing consumption and investment in economy further. however, it has to be acknowledged that several important challenges lie ahead for the country ’ s development. in the short run, the correction of fiscal behaviour requires greater private sector ’ s contribution to economic growth. this implies a more realistic consumer and business behaviour in their consumption and investment - related decisions

support the recovery while preserving financial stability. the second document we discussed is the final report on the effects of too - big - to - fail reforms, which updates the interim analysis, also in light of the experience of the pandemic. the key message, on which we concurred, remains that the ‘ too - big - to - fail ’ reforms for banks are working as intended, reducing moral hazard and systemic risk with no material side effects. we agreed to work on filling some remaining gaps, concerning the information available to public authorities for financial stability risk monitoring and some residual obstacles to resolvability. we also concurred on the need for a system - wide approach to monitor risks that have moved 1 / 2 bis central bankers'speeches outside the banking system. we are therefore committed to strengthening the resilience of nonbank financial intermediation, building upon the fsb ’ s ‘ holistic review ’ of the march 2020 turmoil and on the further work that the fsb will conduct under the italian g20 presidency and beyond. we are now ready to take your questions. 2 / 2 bis central bankers'speeches