have a long history operating with respective greek offices. the fact that such ventures could also involve greek capital in the case of pure joint investments makes one more argument in support of my observation. according to the bank of albania surveys, greek companies are ranked first by the size of capital invested in the albanian economy, while holding the second place for the number of foreign direct investments. the involvement of these banks in financing such activities will play a positive role in shifting the balance of the loans portfolio from retail and consumer crediting toward production activities in industry and agriculture. at the same time, it might also fuel the growth rate of credit to economy, which has already experienced very rapid growth during the last two years, raising concerns for macroeconomic and financial stability. the results of reforms were not limited only to the openness and development of domestic financial market. they generated price and financial stability, sustained economic growth, assisted institutional building and increased confidence. these developments attracted interest of, and brought big financial groups in the region in general and albania in particular. as i mentioned above entry of big financial groups, and the consolidation process that has followed since will continue to grow. what we are observing right now in the market is that the big fish is eating the small fish ; the very big fish is eating the big fish in the european market with implications for the host countries. however, the process is far from over, gigantic fish ( global player ) might enter the region by eating the very big fish. last but not the least, there will be mergers among domestic banks as well. despite the increase in the concentration ratio that comes with these mergers and acquisitions, we have started to observe increased competition in our market. this competition increases efficiency, introduces new services and products, lowers spreads and generates positive spillovers for economic activity. while this makes a good precondition to foster financial stability, it is not a sufficient condition to increase financial discipline. currently, the activities of financial institutions and commercial banks have a limited scope ; however, we are starting to see the signs of financial conglomeration. we have no doubt that this trend will grow and continue in the future. it will bring innovation, new financial instruments and products in the market. along with this, rapid growth of credit and debit cards as well as other systems of payments will continue to grow. while these instruments might not subside or even reduce the use of cash, this trend must be taken into account. transition economies of the region are lucrative markets. they

of eased monetary policy signals is also observable in the deposits market, while it is expected to be transmitted in the future also in other market segments, conform to the time lag of the transmission mechanism. in the primary market, government security yields showed upward trend reflecting developments in relevant structural factors of the demand and supply, without signalling added risk or inflation premiums. verified developments insofar, change the basic projections for economic developments in the future. year 2012 is expected to be influenced by unfavourable developments in the global economy, which may affect the albanian economy as well. foreign demand is expected to provide lower contribution over the course of the year, impacted by economic slowdown in our trade partners. fiscal policy orientation towards further consolidation of fiscal parameters limits the space for a substantial fiscal stimulus to foster the economic activity. under these circumstances, private domestic demand remains determinant for aggregate demand increase in the future. overall, analyses suggest a better performance of private consumption and spending, helped also by the eased monetary policy stimulus. estimates of the bank of albania suggest that, in the course of the year, demand growth below the potential of the economy will continue to exercise low inflationary pressures from the demand side. at the same time, the balance of inflationary pressures generated by supply - side factors is assessed as contained, given the reduced imported inflation and anchored inflation expectations. taking into account the insofar developments and expectations for the future, bank of albania projections show that, with 90 % probability, consumer price inflation for 2012 will range within the 0. 7 % – 2. 8 % band. materialisation of this baseline scenario will be reflected in retaining the stimulating nature of the monetary policy in the course of the year. moreover, the bank of albania remains heedful to future developments and ready to respond in the appropriate time and extent in order to comply with its target on inflation. based on the analysis of the information set out above, the supervisory council holds that pressures on consumer prices at home remain low over the monetary policy relevant horizon ; they have been, however, on the down side over the recent months. on the demand side, below - potential economic growth will continue to generate low inflationary pressures, while shocks from the supply side are expected to be moderate. at the conclusion of discussions, the supervisory council decided to keep the key interest rate unchanged at 4. 25 %. this decision aims to establish the appropriate monetary conditions to comply with the inflation target in the medium run.