Ardian Fullani: Overview of Albania’s banking sector Speech by Mr Ardian Fullani, Governor of the Bank of Albania, at the end-year reception, organized by the Albanian Association of Banks, Tirana, 23 December 2011. *  *  *  Dear bank executives, Dear participants, This end-year event with the Albanian Association of Banks, turned into a tradition of communication between the banking sector and the Bank of Albania, provides an excellent opportunity to make a short resume of the results achieved by this sector in this year as well as to identify its challenges in the upcoming year. The banking sector managed to finish off 2011 successfully. Its role in supporting Albania’s economic activity was crucial, while prudence was made to guarantee its financial soundness. In this regard, the supervisory role of the Bank of Albania has provided an extraordinary contribution. Banking supervision has been proactive and preventive by creating, at the same time, the necessary space for flexible banking activity management. Amendments to the law “On banks in the Republic of Albania”, a number of amendments to the banking regulatory framework as well as the physical interaction through on-site inspections have contributed to enhanced immunity and dampened negative effects generated by the global crisis. The Bank of Albania has periodically conducted stress tests on specific banks to ensure that the banking sector’s security and functionality is never put in doubt.
Dear bank executives, More than three years on from the crisis start, global economy’s perspective to leave this crisis behind remains unclear. Nonetheless, this is about a gradual and long process. Overall, financial institutions, in Europe and beyond, continue to face with the following:   High uncertainties as regards exposure value in sovereign debt securities;    Difficulties to ensure liquidity in wholesale markets;    Reduction of crediting volume and tightening of its terms to fund the domestic economy;    Higher capital requirements arising mainly from new regulatory rules by supervisory authorities. The need to reduce investment risk in sovereign debt is accompanied by huge efforts on fiscal consolidation in many countries, especially in Europe. Hence, EU economic growth expectations, including those for countries that had, insofar, posted above-average economic growth, were markedly down. It appears that the best solution for this situation will come only as a result of various countries’ ability to undertake, at this point, vital social and economic reforms as well as to provide financial support so that, on the one hand, financial stability is maintained and, on the other hand, private enterprises are provided with some relief, thus affecting their future economic development expectations. Albania’s economy maintained its positive growth rates during this period, to absorb external shocks. This flexibility is a precious characteristic that will continue to support the country’s economic development and buffer effects from various shocks, even in the future.