union is the regional cooperation. there are many reasons backing the conclusion that our models of growth must be seen as complementary and not competitive to each - other. it is indispensable that the complete process of structural reforms takes place quickly and in a coordinated way, which precedes the membership to the european union. only in this way the whole region will converge naturally, avoiding episodes of misbalances within the bosom of the european family upon the membership. this will be a real contribution to the long - term sustainability of the european developments. the whole region is going through a political, economic and social consolidation process. the policy - makers, the decision - makers, the examiners and almost everybody declare that their priority is the adherence to the european union. the question to ask is if : we have either to converge towards the european economic zone with small and fragmented economic structures competing with each other for european markets and opportunities, or embrace a model : gaining from the economies of scale, encouraging and exploiting the advantages of the current competitive positions ; that grows the economic prosperity of the whole region and of each individual economy? personally i think that the second alternative is the contemporary approach that our region should embrace with no hesitation. the success of this process shall depend on all our attempts and devotion to see which our competitive advantages are and to build up the right economic, financial, legal and physical infrastructure to use and increase these advantages to become competitive in the global economy. therefore, its is significantly important that the study of the growth model takes place not only from a regional point of view, but to be an approach directed deeply towards the future. the region in itself provides a lot of important advantages : labour markets amongst the asiatic countries and of the eu member countries ; the possibilities of high return profit investments against capital, in real estate and infrastructure are huge and attractive for the developed markets ; the region has a population of higher than 20 million inhabitants sharing pleasant demographic characteristics ; the regional tourism is potentiality indispensable as a product of different climacteric combination to geographical features and various ethnical and cultural traditions. preliminary results of empiric researches in the bank of albania show that the economic possibilities to exploit from regional countries are huge. our analysis of external trade, based on gravity models, reveal that external trade of albania with eu partners stays at optimum levels, while trade with the region is under its potentiality. what does hamper our regional trade to achieve the potentiality? what do

at present, the maintaining of basic balances, i. e., the macroeconomic balance and the financial one, is our major objective. these two pillars represent our legal mandate. therefore, we must do the utmost to consolidate the inherited balances, by making cautious analyses and taking appropriate measures to best absorb all the risks posed to the country ’ s macro - financial stability. currently, the fulfilment of our legal mission has become a difficult and challenging task, full of surprises. our countries represent small economies, whose share and influence can not play an active or imposing role in the international arena. moreover, i am increasingly convinced that our economies are net importers of both material goods and international crisis. bis central bankers ’ speeches personally, i think that the moments we are currently experiencing constitute an historic opportunity for all of us, to leave a good name as competent managers in times of the great crisis. as long as things go well, we fail to understand the need for ongoing adaptation, for constant correction. this is the reason that mostly leads to creation of “ financial bubbles ” in the economy. apparently, decision - makers lack the ability or the willingness to stop blowing bubbles, and hence they burst. from this viewpoint, i assess that the bank of albania ’ s experience carries over elements of preliminary correction, i. e., preventive elements. let me be more specific. since early 2005, we have addressed the interplay between macroeconomic stability and financial stability prudentially. while there was a historic stability in keeping inflation in check, there existed many unclear things in the banking system stability. i would like to remind you, briefly, of the fact that we are talking about a period when the banking system was transformed into a 100 % private capital and when credit expansion dominated the banking business. since 2005, the outstanding credit to the economy has expanded by 7 – 8 percentage points of gdp. moreover, 75 % of credit was denominated in foreign currency and the hedging against exchange rate risk was frequently overlooked. it was the time when competition for market share increased tremendously among banks, even at the expense of credit quality. periodic examinations conducted by banking supervision identified several vulnerabilities that could threaten the financial stability of the system. i would mention : lack of an electronic credit register ; risk management weaknesses, structural weaknesses in internal audit ; lack of transparency in dealing with customers about the supplied products. one of the most important issues worth mentioning is bank management in