households, reaching 33 percent of disposable income of an average family recipient and almost 40 percent in rural areas. the recipients of remittances are from all social groups, including middle income class ( 60 percent ) as well as the low income class ( 27 percent ). our estimates show that the level and severity of poverty are significantly reduced among those households receiving remittances, with greater influence on severity rather than the level of poverty. remittances are mostly used for imported consumer goods, services, and for the purchase or construction of houses. a small share is saved or invested in businesses, mainly in agricultural sector. therefore, the impact of remittances in creating new jobs has been limited. in this view, i do not want to downplay the importance of remittances, but to draw attention to additional structural reforms needed to enhance their impact in the economy. it is not a coincidence that after reaching the level of 14 percent of gdp, the growth rate of remittances has been as constant as that of foreign direct investments in albania. this shows that in the mid - term, there is no difference between the decision of foreign investors and remitters to invest in albania. of course, emigrants may have a better knowledge of domestic markets. they are more connected to their home - country and react faster than foreign investors. nevertheless, they demand guarantees for their investments as much as foreign investors do. therefore, both the volume of remittances and their effectiveness largely depend on improvements of albanian business environment. while efforts to speed up reforms aiming to improve business environment are underway, especially now with the most recent signing of the stabilization and association agreement, a question still remains : is there any other measure that may enhance the contribution of remittances in the development? the bank of albania in cooperation with other governmental and non - governmental institutions has been considering some concrete measures, which i have already highlighted in a conference organized by ebrd on these issues last september. i would like to briefly mention some of them here again, with some new insights. first, improving our knowledge about remittances remains critical for the assessment of policies, which directly impact the developing role of remittances in the economy. the improved information is needed not simply to assist policies on remittances but also financial infrastructure ( e. g. by reducing transaction costs ) and to understand the impact on poverty. the bank of albania has continuously emphasized

closer to banking products and services, including transfers. no matter the small size of remittance amounts. even those small shares left by recipient families in bank accounts could assist economic development as more funds will be available in banks to provide loan products to private sector. the same concern was initially expressed about public administration salaries. now, this service is provided by the banking system, and we see the power of pooling small amounts. for commercial banks, their ability to market additional value - added services, such as savings products, loans or other types of credit to remittance recipients, will require the achievement of a critical mass of customer acquisition, as well as a higher technology delivery mechanism, to bring down the average cost of the investment required to serve that client. micro credit programs and qualitative improvements of banking infrastructure, concerted with introduction of new financial instruments will also help to attract more remittances. promoting microfinance organizations as participants in remittances market, could offer certain advantages to the microfinance sector, to the government and to remittance recipients. the costs of this expansion would primarily fall to the regulatory and supervisory authorities. we already took an important step in bringing these institutions under the bank of albania supervision which we expect to improve their status in the market by enhancing the confidence of operating with them. microfinance institutions are already providing small amount loans to the low income class. their existing programs allow them to leverage their network and geographic reach to assist remittance senders and receivers in gaining access to low cost financial services, as well as access micro - saving and investment products. the third area of our efforts is to channel the workers ’ remittances toward country ’ s development needs. the formalization is a necessary step but does not ensure the role of remittances as a developing instrument. it is often claimed that emigrants are not the most preferred clients of banks, since this category is considered to have more unstable jobs and low level of income. first of all, this perception is not entirely correct and the results of the italian team support the fact that the pool of emigrant savings is becoming significant enough to be a profitable business. the latest italian bank entering the market in albania ( banca italiana di sviluppo ) is another witness of this reality. however, i would like to see the other banks operating in albania to be as aggressive as their italian counterparts in competing for this pool of savings sooner rather than later. there