The far-reaching and rapid expansion of central banks’ powers, coupled with a consistent failure to achieve inflation targets due to persistently low inflation, has exposed central banks to growing criticism from many quarters in recent years. Central banks are increasingly entering the political arena and making decisions that have large distributional effects. Their critics say they are deciding on matters that should be left to democratically elected representatives. Some have even questioned central bank independence itself, the pillar of central banking over the last few decades. There are two types of concerns about central bank independence. The first is that central banks have gained too much independence, something that is at best irrelevant but at worst damaging to the economy. The fact that central banks are struggling to raise inflation demonstrates that they are unable to fulfil their mandate, so it would clearly be better to subordinate them to the 3/7  BIS central bankers' speeches  government, even to the extent of financing its budget. Central banks have been criticised for failing to predict the sustained post-GFC weakness of the economy and for being incompetent. Other brickbats relate to financial stability, an objective that is much more blurred and difficult to grasp than price stability. If, for example, a central bank were to succumb to the temptation to impose too stringent requirements on the financial sector, it would at the same time put excessive demands on society as a whole, without sufficient accountability to the government.
I repeat from the previous forum that it is necessary for you to consider the macroeconomic consequences of your behaviour at an industrial or institutional level, since they are important factors which ensure the long-term stability of your institutions and the system in general. The difference between large and small-size banks, when public confidence in the system in general is in question, is relative. Each bank has its role and share in the system and the difference between the concept “a small bank” or “a large bank” in the context of systemic risks, is ever-increasingly reducing. In addition, the U.S. financial crisis was caused by the imprudence of financial institutions to assess the stability of private debt and accurately weigh the effect of macroeconomic developments on the U.S. household budget. Its consequences remind us of the expression “there's no such thing as a free lunch”. With regard to the issues explored in the forum held in April, I would like to bring to your attention two other issues that I believe remain indisputable priorities for our work in the future. As promised in the first forum, the Law “On repurchase agreements” has become effective upon its entry into force on August 19th 2008. Although this project was pre-announced by the Bank of Albania, according to the information made available by the operational staff of the central bank and the respective commercial banks, we notice that the entry into force of this law has found you unprepared.