At that time, the credit expansion which was caused partly by the deregulation of the credit market resulted in a debt ratio of around 130 per cent, while the interest ratio increased rapidly over a couple of years from around 6 per cent to almost 10 per cent. However, there is no doubt that the recent rise in indebtedness has made households increasingly sensitive to changes in interest rates. Households tend to focus on their cash flow and are unperturbed as long as their debt-servicing costs can be accommodated in their monthly budget. But an interest rate rise of just a few percentage points would have a much bigger impact on cash flow today than when levels were around 15 per cent. An interest rate rise of four to six per cent would cause monthly costs to increase by 50 per cent. Higher mortgage rates could therefore prompt households to increase their saving and reduce their consumption more than expected or intended. Hopefully we will be able to avoid sharp, quick interest rate rises in our conduct of monetary policy, although mortgage rates are also influenced by events outside Sweden. To some extent though, the effect of any increases in rates could be alleviated by the fact that an increasing number of households have recently been switching over to fixed-rate loans. Developments in the commercial property market Prices in the commercial property market have been driven by somewhat different forces than in the housing market.
2.3  Strengthening of regulatory and supervisory framework  The design of strong and appropriate rules and their rigorous monitoring constitutes a guarantee for the preservation of financial stability. The Bank of Albania has been active in improving the regulatory framework, consolidating it further in compliance with the legal provisions and the Basel Committee principles, the European Council directives and the best practices in the area of regulation and supervision of financial institutions licensed by the Bank of Albania. The main objective was the harmonization of the best practices in:   strengthening internal control;    improving banking institutions’ governance;    strengthening the risk management capacities; and    increasing the level of banks’ transparency to the public. With respect to the latter, the Bank of Albania has required higher and improved communication of the banking system with the public about the products and services being provided, the promotional campaigns for new products and the provision of information on their real financial situation and risk profile. BIS Review 78/2010  7  3. Other Bank of Albania activities  After the analysis of the two key functions of the Bank of Albania, I would like to elaborate on some other aspects of the central bank’s work. 3.1  Payments’ system  The payments’ system reflected security and efficiency in 2009. On average, 225 transactions a day were processed and settled in the AIPS system, with an average daily value of ALL 19 billion.