Possibly because they held back from selling their holdings because they were reluctant to go underweight a large component of an index they tracked (or were measured against). How to improve the performance of the asset management industry has been relatively neglected. That matters because in a market economy regulators should not be the first line of defence. Myopia Agency problems and incentives are not, however, the sole source of exuberance. I doubt that, in managing their banks, many bankers deliberately or even consciously drove the system over the cliff. Rather, like others, many were myopic about the risks in the system. Innovations in technology, the opening up of the world economy, new markets for transferring risk, and years of smooth growth, apparently attributable to better macroeconomic policy frameworks – all of this encouraged a sense that the world had become a safer place. High actual returns were extrapolated forward into required future returns. Add in to the mix, complexity obscuring the risks in the system as a whole. And, although UK policy rates were relatively high for a number of years, accommodative global monetary conditions fuelled a search for yield and underpinned confidence in resiliently liquid capital markets. 2 Distorted incentives, myopia, complexity, easy global monetary conditions: a heady mix. And a mix which the prevailing regulatory regime was singularly ill equipped to address, and in some respects had done much to create through inadequate capital requirements and an absence of liquidity requirements. In fact, a toxic mix.
In this regard, the Bank of Albania considers remittances as an important source of income in the economy and a contributor to the Balance of Payments. From a narrower perspective, remittances are estimated to have a significant impact on Albanian households, for reducing the poverty and improving the quality of life. Even in the case of Albania, the studies performed by the Bank of Albania and the World Bank show that the income from remittances are allocated mainly for consumption, medication, and education, as well as for savings and investments, the latter mainly for residential properties. In addition to the above, the Bank of Albania treats remittances also from the perspective of their inflow channels in the Albanian economy. Recent studies show that the formal transfer channels dominate, mainly through money transfer financial institutions, and less through banks. In the meantime, remittances in cash remain at high levels, which is worth for an in-depth analysis. The World Bank survey conducted in 2016 concluded that the reasons for the limited use of the banking channels are the high costs on money transfers and the perceived cumbersome and complex procedures. To illustrate my point, according to this survey, the costs of remittances toward Albania are estimated at 9.4 per cent of the amount sent, compared to the 7.2 per cent average in the region. We are all aware that the more financial channels are used, the more finances penetrate in the economy.