notches, respectively ; and iceland ’ s sovereign cds spread shot up to almost 600 in the first two days after the announcement, from around just over 300 in the days prior. but both the rating agencies and markets got the sign of the second event completely wrong, with further downgrades and the cds peaking at 1473 on 10 october. it bis central bankers ’ speeches took them a while to correct this, and the cds was down to around 180 by the end of 2012. to be sure, there were other things going on at the time, but still! let me conclude by saying that the icelandic case seems to support the conclusion that it is premature to state that we are in or heading towards a world without risk - free assets in the narrow sense. it will take policy mistakes of gigantic proportions in several parts of the world to get there. but the risk is not and never has been zero. bis central bankers ’ speeches

solution to this problem is a priority in the verge of increasing global demand and energy prices. speeding up the privatization process of the remaining state assets is another important step forward. special attention should be paid to structural reforms, particularly property rights and legal framework. in our opinion services, construction and in particular agriculture will remain driving forces of the gdp growth in the coming years. therefore i would strongly agree with any initiative that encourages fdi ’ s in these sectors through attractive laws and other measures. i believe fdi ’ s are very important for providing long term stability of the foreign sector. moreover the productivity growth that usually follows fdi ’ s inflows will play e significant role in reducing current account deficit. our economy needs more foreign direct investments hence country credit ratings constitute a chief priority for our economy. it is my belief that fdi ’ s represent a regional rather than an individual challenge for the south east europe. countries in the region must coordinate their efforts toward creating a regional market. regional infrastructure projects will significantly increase attractiveness and competitiveness as well as international financial market awareness toward our region. it will improve confidence and provide necessary economic incentives to enter in the region leading to higher fdi ’ s inflows for each economy. inflation our economy has experienced a relatively long period of stable prices. annual inflation figure as measured by the consumer price index, for the last 12 months is reported at 2. 4 percent. both monetary and fiscal policies have been important factors in keeping inflation low. however, recently inflation pressures have accelerated. the fast growth of credit to economy, the steep increase of oil prices, administrative increase of energy prices, as well as other risks have the potential to create inflationary pressures and pose risk to elevate inflation expectations. bank of albania will take all necessary actions to ensure an inflation rate of 3 per cent with a tolerance band of ± 1 percent, in the short and long run. interest rates during the recent years interest rates have dropped reflecting the ease of monetary policy. this has been a general trend for all financial assets either in lek or foreign currency. on average banking system applies 9. 7 percent for loans in domestic currency. the yield of 12 month government securities dropped at a minimum of 5. 74 percent in june 2006. however, following the last decision of the bank of albania and latest trends in global markets, a modest increase in interest rates has been observed during the last three months for both domestic and foreign financial instruments. we expect this trend to persist within