CLAR provides a regular opportunity for supervisors to respond to evolving liquidity risks and firm practices over time. See Tarullo (2014) for more detail. 19  See Eisenbach et al. (2015). BIS central bankers’ speeches  5  monetary policy implementation frameworks. We should carefully consider the incentives any of our tools create. Instead, the message I would like to convey is that there may be benefits to specialization among complementary functions of the central bank. Making sure that banks don’t take excessive liquidity risk is a core role of supervision, and supervisors are likely to be much better at this task than the staff of market operations departments. Providing liquidity to financial markets in real time, to make sure money markets remain connected, that the stance of monetary policy is appropriately transmitted to the real economy, and to support financial stability, is a core role of market operations departments. A long history of financial crises has shown that central banks can add liquidity to the system when it is most needed, especially at time when private institutions are unable to do so. Balance sheet normalization My discussion so far has focused on the longer-run. However, the current situation also needs to be taken into account: Today, many advanced economy central banks find themselves in a situation where their policy rate is at or close to zero, and policy accommodation is being added or maintained by asset purchases and forward guidance.
Banking system and supervision  The Albanian banking system has faced numerous challenges over the recent years and has succeeded in overcoming them, always maintaining sound parameters of liquidity and capitalisation. Even in 2011, banking system activity was conducted in an unfavourable context of international financial markets and the sluggish demand for loans and economic growth at home. Regardless of these factors, banks in Albania remained well capitalised and healthy. Economic growth slowdown was reflected in moderate performance of crediting and increase in non-performing loans, whereas bank liquidity condition improved. During 2011, prudence for monitoring the banking system was heightened for early identification of potential risks, and the regulatory framework was consolidated. Stress-test results show that the banking system remained stable and resilient to large shocks on macroeconomic indicators and parameters. Following, I would like to focus on several main indicators of the banking system in 2011, as this system remains the main actor of financial intermediation in Albania. Banking system highlights At end-2011, the banking system assets accounted for about 85% of GDP, from about 81% at end-2010. Financial profit of the banking system was downward, with a significant increase in provisioning expenses playing a determinant role. In the framework of absorbing any potential losses from credit risk, the banking sector increased the provisioning by about 52.4% from a year earlier. By contrast, net operating profit was up by about 7.7%, which shows that the banks have generally achieved a stable net profit and volume from their core activities.