8  By construction, an event study approach can only capture the short-run elasticity of substitution. The medium to longer terms effects may be somewhat less as further portfolio rebalancing takes place. BIS Review 111/2010  11  that the efficacy of the latter will be less in normal times. The theoretical case for an effect from asset purchases rests on there being frictions that prevent the Eggertsson-Woodford neutrality result holding. During a financial crisis, when credit is hard to come by, arbitrageurs may find it difficult to find the wherewithal to correct any excessive compression of the spread between government bond yields and expected policy rates. During normal times, such credit will be easier to come by and the activities of arbitrageurs may therefore lead to the attenuation of the effectiveness of asset purchases as a monetary policy tool. Third, while purchases of government debt may be a suitable last resort at the ZLB, regular purchases during normal times will be liable to give rise to the suspicion that the central bank is doing so at the behest of the government in order to lower the cost of budgetary finance, rather than for monetary policy purposes. In other words, it is intending to monetise the debt permanently. Aside from giving rise to doubts about the central bank’s independence, it could also prompt inflation expectations and long-term nominal interest rates to rise. The communication challenge for a central bank in these circumstances would be formidable.
Joint EU integration would supersede certain regional integration frameworks, such as trade and factor mobility, but it would not supplant the need for further policy dialogue and common regional perspectives and solutions. Let me now to briefly describe the role of institutions in structural reforms in Albania. Institutions and structural reforms in Albania It is virtually impossible to do justice to the breadth and depth of reforms in Albania over the limited allotted time. Therefore, I will try to highlight only its main items. In order to improve our business environment, the Albanian authorities have engaged in comprehensive reforms of the property rights, of the tax regime, of the electricity sector, of the general infrastructure, and remain engaged in the fight against informality. The most recent measure in this regard is a banking sector regulation that aims to put an end to the practice of lending through uncertified company balance sheets. Further, to enhance efficiency and tackle corruption and informality, a determined drive to improve the functioning of the public administration, which broadly speaking encompasses also the judicial system reform, has been undertaken. In order to increase economic stability and to improve financial resilience, we have initiated a wide ranging set of reforms. To that end, the Government has improved its public finance management procedures, has adopted a fiscal responsibility framework, and has undertaken measures to reduce debt. The Bank of Albania has strived to model itself after the ECB. Its professionalism has increased while its independence, transparency and credibility have all improved.