Central banks of advanced economies have stated clearly that they will continue to apply the quantitative easing, as long as inflation remains below the target and unemployment remains high. Actually, the so-far solutions have been in forms never experienced before. In fact, they pose new challenges with regard to implementation and potential risk spillover effects projected in the long run. Under these circumstances, the Bank of Albania, considering the situation as rather complicated and after an intensive work, has succeeded in designing a full package of measures. They aim to boost credit and improve micro and macroeconomic balances of financing the economy, about which I will inform you in the following. Package of credit recovery The idea about the package that we are introducing today occurred last year, where we discussed, jointly with you and representatives of the Ministry of Justice, about legal amendments needed to promote collateral execution. Since that meeting, our experts have worked intensively for enriching it and bringing it to today’s form. The package consists in three pillars: legal pillar; monetary policy pillar and prudential pillar. I will dwell on them in the following: 1 – Legal pillar The rapidly increased non-performing loans in the recent years, reflects, inter alia, a number of known and unknown problems of collateral execution. Therefore, together with the banking industry, we have identified and made relevant proposals for a higher efficiency of the collateral execution process.
Dimitar Radev: Spillovers from the ECB’s monetary policy decisions are fast and strong Statement by Mr Dimitar Radev, Governor of the Bulgarian National Bank, for the IFLR Yearbook: Global Banking & Financial Policy Review 2019/2020, published on 24 September 2019. * * * There is much discussion these days about the course of monetary policy in the euro area. What global headlines rarely catch, however, is how such policy affects the European economies outside the euro area. Bulgaria is an example where, due to the high openness of our economy and the strong financial links with the euro area, spillovers from the ECB’s monetary policy decisions are fast and strong. Around 50% of Bulgaria’s exports go to the euro area. Investors from the euro area account for 67% of our FDI stock. Our banking system is dominated by the presence of euro area owned banks, which hold around 55% of the sector’s assets. The monetary policy regime in Bulgaria (a currency board with the national currency fixed to the euro) is another factor enhancing the direct transmission of ECB’s monetary policy. Therefore, even though Bulgaria is not a member of the euro area yet, it is important to consider how our economy is affected by the ECB’s continued accommodative stance. Financial stability and its implications are issues to be potentially concerned about. The ECB’s monetary policy in recent years has succeeded in sustaining the economic recovery in the EU following the great financial crisis.