as a matter of fact, a complex interdependence between the economic growth and banks ’ financial soundness is noted. decline of investments and partially of consumption in the economy has been reflected in decreased credit demand. on the other hand, increased premium risk has made banks more tightening in lending standards, showing greater attention to liquidity indicators. the bank of albania deems that we may enter into a vicious circle, where non - lending to the economy would result to a prolonged economic slowdown, due to damages in related interests of all stakeholders in the economy, including banks. we think that this situation requires countercyclic operations in a general level. in practice, the banking sector should exercise its role in promoting the development of the economic activity, naturally showing proper prudence. this system is the generator and controller of market economy. provision of development impulses by acting jointly should be its primary task, while the positive synergies will bring mutual benefits to economic growth and financial stability. the bank of albania deems that the banking industry should review the banking activity growth strategies, aiming at their better harmonization with the necessary human, financial and technological resources. operational risk identification and management remain a priority. in practical terms, this process should aim at placing internal mechanisms to prevent creation of excesses in certain directions of the banking activity, aiming at a better diversification of investments and supporting steadier forms of financing resources. all these require strengthening of internal audit systems, stimulation of structures that assess and manage operational risks in general, bank staff expertise, and establishment of stable relations with depositors and other beneficiaries of banking services through transparency enhancement. in this framework some issues that deserve special attention will be : a ) setting parameters that ensure a better equilibrium between performance of risky assets of the banking sector and financing resources, as concerns type of currency, maturity term, interest rate ; b ) setting volumes and certain features of banks ’ operational assets that enable maintaining of satisfactory liquidity levels ; c ) identifying certain mechanisms that will mitigate the cyclicality in banking activity, particularly in the context of rapid growth of banking activity or in cases of its significant contraction ; d ) strengthening requirements for managing extraordinary situations and business continuation ; e ) improving structures of management, accountability and performance appraisal and increasing expenditure effectiveness for training, financial stimulation and human resources strengthening ; f ) further strengthening of the requirements for transparency to clients, and the regulatory framework for customer protection from likely abusive practices in the financial system.

public confidence would lead to more effective mobilization of all financial resources in the economy, addressing them according to free market principles to the benefit of individuals, businesses, decision - makers and banking industry itself. ultimately, this would be translated into the benefit of the country, giving an additional, real and tangible opportunity to the country ’ s rapid convergence to the european union. thanking you for your attention, i invite you to discuss on these issues.