is a condition, in which an economy ’ s mechanisms for pricing, allocating, and managing financial risks are functioning well enough to contribute to the performance of the economy ” 1. this definition implies that the financial system is capable of accomplishing appropriately its three main roles. firstly, the financial system is capable to achieve effective distribution of economic resources over time. secondly, it identifies and manages appropriately financial risks. thirdly, it can softly absorb shocks and surprises that occur in the financial system and the real economy. i think that the goal of this conference is to analyze financial markets concentrating on these three aspects, and to steer our efforts towards evaluating and guaranteeing the achievement of financial stability in our region. our economies are quickly developing, and they are experiencing rapid changes, and we, as representatives of central banking in our countries, must adapt to these changes and promote growth without losing sight of prudential supervision. latest trends towards expansion, liberalization and privatization of the financial system in the context of a fast - paced globalization of the world economy have put the goal of financial stability on top of the priorities in our region. during the last few years, the financial sector has recorded positive growth rates in all countries in our region. however, i think that the merit for such a growth goes to the most vital segment of the financial safeguarding financial stability, theory and practice ( 2005 ), international monetary fund, page 83, last paragraph. system, that is, the banking system. the key factor to the successful growth and consolidation of the banking system has been the rapid privatization of banks, which is, at present, almost complete. this process has opened the way to the arrival of well - known international banks that have brought foreign capital, expertise and confidence in the region. the entry of those banks, besides the positive aspect of fostering growth and development, calls for higher prudence in the supervisory role of the central banks. as a result of the above developments, the degree of financial intermediation in our region has further increased. credit to economy has played a considerable role towards the deepening of financial intermediation. albania has recently joined the group of countries experiencing a credit boom, as annual growth rates have been in the range of 60 - 70 per cent in the last two years. an interesting indicator of banking system transformation is the ebrd indicator regarding “ banking system reform and liberalization of interest rates ”, which combines the quality of supervisory and regulatory base, the ownership structure of banking

/ 4 13 / 10 14 / 4 14 / 10 15 / 4 0. 0 2013 / 4 13 / 10 14 / 4 14 / 10 15 / 4 note : the range and the median of majority forecasts of policy board members. figures for fiscal 2014 exclude the direct effects of the consumption tax hike. source : bank of japan. bis central bankers ’ speeches chart 2 - 2 the bank's outlook for economic activity and prices for fiscal 2015 - 17 ( 1 ) real gdp growth rate % 3. 5 fy 2015 3. 5 % fy 2016 3. 5 3. 0 3. 0 3. 0 2. 5 2. 5 2. 5 2. 0 2. 0 2. 0 1. 5 1. 5 1. 5 1. 0 1. 0 1. 0 0. 5 0. 5 0. 5 0. 0 0. 0 0. 0 - 0. 5 - 0. 5 - 0. 5 - 1. 0 13 / 10 2013 / 4 14 / 4 14 / 10 15 / 4 - 1. 0 13 / 10 2013 / 4 14 / 4 ( 2 ) cpi inflation rate 2. 5 % fy 2015 2. 5 % 14 / 10 15 / 4 - 1. 0 fy 2016 2. 5 2. 0 2. 0 2. 0 1. 5 1. 5 1. 5 1. 0 1. 0 1. 0 0. 5 0. 5 0. 5 0. 0 13 / 10 2013 / 4 14 / 4 14 / 10 15 / 4 0. 0 13 / 10 2013 / 4 14 / 4 14 / 10 15 / 4 0. 0 % fy 2017 13 / 10 2013 / 4 14 / 4 % 14 / 10 15 / 4 fy 2017 13 / 10 2013 / 4 14 / 4 14 / 10 15 / 4 note : the range and the median of majority forecasts of policy board members. figures for fiscal 2017 exclude the direct effects of the consumption tax hike. source : bank of japan. bis central bankers ’ speeches chart 3 potential growth rate and output gap estimated by the bank ( 1 ) output gap % as of apr. 2015 as of apr. 2013 - 2 - 4 - 6 - 8 - 10 cy 2006 ( 2 ) potential growth rate 1. 4 y / y % chg. as of apr. 2015 1. 2 as of apr. 2013 1. 0 0. 8 0. 6 0. 4 0. 2 0. 0 fy200