In general, the accomplishments of the Bank of Albania were assessed in the framework of the Memorandum of Economic and Financial Policies signed between the Bank of Albania, Ministry of Finance and this institution. Particularly, they evaluated the maintaining of inflation within the Bank of Albania targeted band (2-4 percent), the maintaining of a relatively stable exchange rate and the efforts for modernizing the banking system. At the same time, the missions expressed their support and encouraged the mid-term plan on cash reduction in economy. Rising the lending, developing the real sector and amending the regulatory framework of banking supervision were other topics discussed in these meetings and in the contacts of the members of the mission with the Bank of Albania experts. The Bank of Albania was visited by the Mission of Technical Assistance of the IMF, which was focused on banking supervision area, implementation of international accounting and payment standards, application of monetary statistics standards and integration of the Bank of Albania into the European Monetary System. The Bank of Albania required assistance in inflation targeting area. The so-far assistance by the IMF to the Bank of Albania is regarded as a stable and fruitful one, impacting significantly on the accomplishment of up date central banking standards. Also, in the framework of cooperation with the World Bank and its financial support, the Bank of Albania has initiated the Automated Electronic Clearing House Project, which will serve the further modernization of payment system and its approximation to international standards.
This increase is believed to have been adequate to supply the demand of the economy for money under the conditions of an economic growth of 6 percent and of an inflation rate within the two-to-four percent targeted range. Money supply and the closest money aggregate (M1) have known faster growth rates during 2004 compared to year 2003. This is a consequence of a rising demand of the economy for monetary assets, reflected even in the invigoration process of lending to the economy throughout the year. Also, the controlled inflation level has rendered possible the maintenance of a real interest rate in positive terms, despite the ongoing reduction of nominal interest rates. The real positive interest rate has maintained the tendency of households to deposit their savings in the banking system, bringing about further reductions of the relative level of currency outside banks that circulates in the economy. The rising demand for monetary assets has been shaped mainly as the demand for monetary balances in Lek. The demand for Lek has been particularly evident in the summer time, being partially supplied even by means of liquidity injection through the Bank of Albania intermediations in the foreign exchange market. The annual growth rate of deposits in Lek was 12.9 percent, being a satisfactory growth compared to the average historical rate. It was adequate to cover Government demand for the financing of deficit and the economy demand for credits in Lek. Meanwhile, deposits in foreign currency grew by 17.1 percent during 2004.