But more importantly, it comes from my current position as a policymaker from a small, open economy where the collapse of three cross-border banks was the most noticeable event in the unfolding of the financial crisis that hit the country in 2008. The combined balance sheets of these banks was 10 times Iceland’s GDP, and their combined bankruptcy, measured in terms of balance sheets, ranks second in size in the international history of corporate failures, only after Lehman Brothers. And this happened in a country that ranks among the smallest in the world. I will use the case of these banks to illustrate current problems with cross-border banking more generally and as a yardstick against which to measure current reform proposals. Cross-border banking expanded significantly in the years prior to the financial crisis, as is witnessed, for instance, by the growth in cross-border banking claims measured by the BIS International Banking Statistics. Attending this growth was a steady build-up of cross-currency liquidity risk. Such risk can take two forms: currency mismatches and maturity mismatches between foreign currency assets and liabilities. To take an example, the euro area as a whole had a more or less balanced current account position. A fact that drew less attention before the crisis, however, was that European banks had built up huge USD-denominated balance sheets that had mismatches, especially in terms of maturity. This became a major problem when there was a run on dollar-denominated bank liabilities of non-US international banks post-Lehman.
The service of electronic transactions (e-banking) as a banking product began four years ago, although it may be said that it has not reached satisfying levels as far as its introduction and the use by the public is concerned. So far, two banks have been providing this service to particular clients (mainly businesses) for the carrying out of transfers, different payments etc. Over the present year, other banks have planned to provide this service. Table 1: Number of cards and ATM/POS 2004  2005  2006  Cash cards  26,736  173,161.00  220,657.00  Debit cards  6,552  50,066.00  70,176.00  Credit cards  806  2,550.00  4,245.00  136.00  169.00  Pre-paid cards Total  34,094  225,913.00  295,247.00  ATM  93  205.00  266.00  EF/POS terminals  155  779.00  1,073.00  4. The network and services expansion through the bank offices  Over 2005 the banking system continued to expand its network rapidly within the Republic of Albania territory. It expanded with more than 50 branches and agencies throughout the country, although most of them were established in Tirana. A considerable number of branches and agencies have been opening in small towns, indicating that a large share of the population is now being provided with banking services. Almost all banks have established new branches and agencies, but just like in 2004, the opening of 29 branches and agencies by the small banks (G1 group) makes an impact.