In this process, we will make use of the experience gained during the last months and the directions in which the international standards are changing in this area. We are aware that this process requires constant communication with the banking industry. Also, the identified measures will be taken by allowing the proper time necessary for the banking industry to recover and prepare. As a matter of fact, the Bank of Albania has initiated this negotiating process first of all within itself. Some regulatory acts of supervisory framework, which are being discussed lately, mentioning the draft-regulation “On liquidity risk management”, are prepared by taking into account the above goals. Also, procedures for systemic risk identification and assessment, as well as response to them, are being completed. 4  BIS Review 129/2009  In this framework and beyond it, the Bank of Albania believes that all the public authorities that play a role in financial market regulation, supervision and development, should be committed to a similar process, having the strengthening of the regulatory and operational framework as the final goal, in order to firm up the long-term financial system stability. To this end, we think that it is necessary to pursue such policies that enable re-establishment and maintenance of balances in fiscal, banking and monetary activity, supportive to a stable economic growth over the medium and long run.
I would briefly like to develop these two points. The past two decades have been characterised, on the one hand, by an increasing integration at the global level of goods, services and capital markets and, on the other, by a reduction in inflation that has stabilised at low levels. Given the coexistence of these two phenomena, a number of observers have concluded that there appears to be a causal link. Where exactly do we stand today? BIS Review 28/2008  1  For over ten years, with the growing integration of our economies in the past few decades, powerful forces, throughout the world, have been acting to enhance price stability. Each year, the arrival of tens of millions of people on the world market increases global production capacity, in particular for tradable goods. For monetary policy in developed countries, this process is equivalent to a sequence of positive supply shocks that take the form of a spontaneous decline in the import prices of manufactured goods. All other things being equal, this terms-of-trade gain allows for a lower inflation rate for a given capacity utilisation rate. More fundamentally, and although things seem to be less straightforward in this area, it is possible that the increasing openness of our economies may have structurally changed the wage and cost formation process in a manner that favours price stability. Heightened competition triggered by imports reduces the market power of firms at the national level. However, other more indirect effects are also detectable.