Ardian Fullani: On building capacities for policy design and implementation Opening remarks by Mr Ardian Fullani, Governor of the Bank of Albania, at the workshop “On building capacities for policy design and implementation", Tirana, 3 December 2009. *  *  *  Dear participants, It is a very great pleasure for me to open the proceedings of this two-day workshop, entitled “Building Capacities for Policy Design and Implementation”, organised for the first time in Albania by the Bank of Albania, in co-operation with the Center of Excellence in Finance (CEF), Ljubljana, with support from the European Commission, European Central Bank, and International Monetary Fund. Welcoming you here in Tirana, allow me to express my gratitude for the excellent work done by the CEF in the course of these years, to the benefit of our region. Since our Washington meeting last April, the effects of the global crisis increased their presence in our region; however, as I have already emphasised even earlier, they did not immediately concert to full blown economic and financial problems. The extension of crisis effects to the real economy, to the budgets of governments and to financial sectors of the region, was mitigated by sound macroeconomic policies pursued in the recent years and by the availability of International Monetary Fund funding on an unprecedented scale, in coordination with support from the European Commission and the EBRD.
Importantly in this connection, the Spanish economy has sufficient depth of stability to enable it to weather the impact on household spending of an appreciable house price correction, in the unlikely event that it should occur. The soundness of Spanish credit institutions, underpinned by high solvency levels and comfortable bad debt coverage ratios (a matter to which I will return later in the more general framework of the situation of the financial system), minimises the possibility that downward adjustments in house prices, should they occur, would significantly impair banks’ ability to continue to efficiently finance the spending decisions of firms and households. Moreover, unlike in other countries, Spanish households have not started significantly to borrow against their increased housing wealth to directly finance current consumption plans. In any event, the losses in competitiveness, household debt levels and house prices evidently entail a risk of the expansion being interrupted. The economic policies under national sovereignty thus have the important mission of preventing these risks from materialising and providing a solid foundation for growth. In particular, since monetary and financial conditions will most likely continue to be relatively generous for the needs of the Spanish economy in the foreseeable future, it will continue to be the responsibility of fiscal policy to help establish an overall macroeconomic stance that will contribute to mitigating spending pressure.