Consequently, the young may not have access to the credit they need to even out consumption to the extent they would like. A pledge of assets—collateral—can help to solve this problem, since it can be claimed by the lender in the event of a loan default. For most households, the main form of wealth is human capital—the value of the wages that the household members can earn over the course of their lifetimes. But human capital cannot always be credibly pledged as collateral. For funding of educational investments, government intervention in the form of the federally-guaranteed student loan program helps address this problem. While private student loans exist, they typically require a co-signer with a strong credit record. Moreover, these borrowing sources are broadly restricted to education-related spending 1/5  BIS central bankers' speeches  only. The second most important asset on the balance sheet of many households is housing equity. So, in addition to being a source of shelter, housing can be a major form of collateral for borrowing for many households. In fact, for those households that have collateral available to secure loans, housing equity is by far the most important form of collateral. What this tells us is that the performance of the housing and mortgage markets are important to the retail business. When home prices are rising and housing equity can easily be converted into cash, we can expect to see relatively high levels of consumption, all else equal.
We have also carried out a comprehensive review of the supervisory and regulatory frameworks, to better address the risks to the banking sector: operational risk, market risk, credit risk and liquidity risk. Finally, we have actively participated in an international forum for addressing this phenomenon, known as the Vienna Initiative, and have enhanced our communication with international partners and home-country regulatory agencies. Third, we have spent a lot of time and energy administering a consolidation process in the banking sector. As a result of this process, which may now be considered as finalised, the number of banks has now been reduced to 12. This has created the premises for the banking sector to be more motivated to lend, innovative in terms of products, and more competitive in terms of cost. From a broader perspective, the Bank of Albania has worked on improving the regulatory architecture of the financial system in Albania and strengthening financial safety nets. Together with other public agencies, we have, established the Financial Stability Advisory Group; improved the legal framework for the functioning of the Deposit Insurance Agency; approved the Resolution Law; drafted a sub-legal and regulatory framework; and, established the necessary structures for them to function. In parallel, we have adopted a modern framework for formulating and implementing the monetary policy, and steadily maintained an accommodative stance. Monetary stimulus has enabled the financial environment in Albania to be transparent, and have low interest rates, ample liquidity and moderate exchange rate fluctuations.