gent sejko : monetary policy of the countries of the region between us federal reserves and european central bank speech by mr gent sejko, governor of the bank of albania, at the becici summit of the countries of the region on " regional financial stability in a new global environment ", becici, montenegro, 16 june 2017. * * * dear mr. chairman, dear colleagues, i would like to start by thanking the organizers for this invitation. as usual, i find it highly useful to share, among colleagues, opinions on common challenges. the title of the panel suggests our monetary policy stances are somehow shaped by the ecb and the fed monetary policy paths. though far from being the full picture, this is true, at some extent. the monetary policies of both these central banks are highly relevant to us. they affect external conditions and they could dictate the directions, the speed and the price of financial flows. furthermore, for countries with a dollarized or euroized financial system, they might also affect domestic credit, financial conditions, balance sheets, as well as exchange rates. so, this brings us to the following questions. where does our monetary policy sit at the current situation? what challenges do we face? and, how do we respond to the shifting of these external monetary policies? i am quite confident these issues will be broadly covered during this event. now let me make a few remarks, regarding the monetary policy of the bank of albania vis - a - vis that of the ecb or the fed. the boa has pursued an expansionary monetary policy, which has been both supported and facilitated by the monetary policy stance of the ecb. during the past four years, the bank of albania has been engaged in an extensive course of monetary accommodation. in the presence of weak cyclical developments and low inflationary pressures, we have decreased our policy rate to a historical minimum of 1. 25 %. furthermore : we have increased our liquidity injections in the banking system ; we have adopted negative rates for required reserves in euro, in line with the policy of negative deposit interest rates in the euro area ; we have been engaged in a clear and transparent forward guidance, announcing our preference for accommodative policy in line with our inflation target ; however, unlike the fed and the ecb, and similarly to other central banks in the region, we have not activated unconventional monetary policy tools. this is because the monetary policy accommodation pursued by the

assets1 accounted for 88 % of the total assets held by households below the 20th percentile of the distribution ( with their principal residence accounting for 66 % of the total ). however, for households in the 90th income percentile, real assets represented 73 % of all assets and the principal residence just 34 %. similarly, a very small percentage of low - income households have listed shares or investment funds in their portfolios ( less than 3 %, compared with 33 % and 22 %, respectively, of households in the top decile of the distribution ). one factor that influences households ’ investment decisions is familiarity with financial products. indeed, as the bestinver - iese / cif observatory has shown, even in a study targeted at people more likely to be acquainted with financial investments, familiarity with savings vehicles and financial decisions vary across income, age and gender groups. these findings are consistent with those of the banco de espana ’ s latest survey of financial competences. this survey, based on a representative sample of the spanish population aged between 18 and 79, shows broad differences in the level of familiarity with the most common financial products. for example, according to the survey results, fixed - term deposits are the most common financial product among households ( 26 % ), and yet they are also one of the least known ( just 73 % have heard of them ). the population segment least aware of this basic investment product is that with the lowest educational attainment and the lowest income ( around 60 % have heard of them ). 2 real assets include principal residence, other real estate property ( homes, building plots, rural property, garages, industrial premises, shops, commercial premises, offices and hotels ) and the value of businesses related to selfemployment, jewellery, artworks and antiques. bover, o., l. hospido and e. villanueva ( 2018 ) “ survey of financial competences 2016 : main results ”. the public ’ s lack of basic financial literacy is also evident in their unfamiliarity with the concept of risk diversification. specifically, the survey of financial competences gauges whether respondents understand that, generally speaking, a broad portfolio of equities will offer less volatile returns than a single share. according to the survey, only half of the population understands this concept. for some years the banco de espana has been implementing its financial education plan, an initiative designed to help the public better manage their personal and household finances, and to foster what we