Reasons behind this behaviour are understandable and related to the fact that the majority of the society acquires information circumstantially, hoping that the actual failure becomes a lesson for the future. One way to eradicate circumstantial learning is the introduction of financial reading at an early stage of education. In this view, I would proudly say that, the Bank of Albania has provided an outstanding contribution. Allow me to briefly make an résumé of our work in this aspect. The first strategic station of financial education provided by the Bank of Albania was needs assessment and identification of training priorities. From this point of view, we assessed that it was indispensable to open the Bank “de facto” to the public. More frequent communications with the market and its important participants, as well as periodic explanations of monetary policy decision-making and risks balance related to inflation and financial stability, are some initiatives that we consider as a very effective education process. I am proud to say that now we have:   A public opinion that builds up expectation as regards our decision-making;    A media sector, which has admirably enhanced understanding, interpretation and expectations related to our decision-making;    A banking sector, which reads accurately and responds with high flexibility to the direction oriented by us;    A qualified public critique, where Bank of Albania finds a mirror of alternative opinions on its adopted decisions and practices.
The Committee has also published for consultation a proposal on the setting of further restrictions on the use of internal models to measure credit risk. These restrictions would consist in limiting modelling of the so-called “low-default portfolios” for which there is an insufficient history of default to be able to use advanced models. This would be the case, for example, of portfolios of banks, specialised lending or large corporations. In addition, in portfolios deemed suitable for modelling, minimum levels would be established for parameters (for example, probability of default and loss given default) so as to rule out abnormally low estimated values. Lastly, the Basel Committee has also published for consultation the possibility of setting a floor or minimum values for RWAs resulting from internal models. Not only the advisability of this is being discussed, but also, if approved, the design and calibration of these minimum values. Essentially, it would be a question of limiting to a certain percentage the maximum capital saving that institutions may obtain by modelling risk on their own account, rather than measuring it using the standardised approach. Conceptually, and provided it is correctly designed and calibrated, a floor of this kind can be a useful tool in the aim to reduce unwarranted and unwanted variation in RWAs: it would set for all institutions the same maximum level of saving obtainable using models, and it would help to ensure a minimum desired level of capital for a specific level of risk, and all without relinquishing risk sensitivity.