22  This change was intended to  ensure the leverage ratio did not impede the transmission of monetary policy. But to offset the removal of central bank reserves and ensure the amount of capital banks need to meet the leverage ratio requirement did not decrease, the requirement was also raised from 3% to 3.25%. A second change was designed to deal with window dressing behaviour that we had started to observe. From 2016 banks have been required to report and disclose the denominator of the leverage ratio based on assets averaged over the quarter. 23,24  Previously it was based on assets observed on the last day of the  quarter. But this led to banks seeking to shrink their balance sheets at quarter-ends in an attempt to  22  Prudential Regulation Authority Statement on the leverage ratio, https://www.bankofengland.co.uk/-/media/boe/files/prudentialregulation/publication/pra-statement-on-the-leverage-ratio-august2016.pdf?la=en&hash=F50C86C8AAA788EBFAC159F009BBED7D2FE07B83, August 2016. 23 Prudential Regulation Authority Policy Statement 27/15, https://www.bankofengland.co.uk/-/media/boe/files/prudentialregulation/policy-statement/2015/ps2715. 24 Banks in scope of the UK leverage ratio framework are required to disclosure a leverage ratio each quarter. A bank’s leverage ratio denominator should be based on its daily on-balance sheet exposures averaged over the quarter and its monthly (on the last day of the month) off-balance sheet exposures averaged over the quarter. 10  All speeches are available online at www.bankofengland.co.uk/speeches  10  increase the leverage ratios they disclosed. This led in turn to volatility in some financial markets at these times (Chart 6). Volatility at quarter-ends appears to have abated since this change.
This correction has also affected the establishment of more steady balances of the demand and supply for foreign currency in this period. Notwithstanding these encouraging developments, lending activity at home remains far from its potentiality, responding to the lower demand for banking loans and the tightened lending conditions as applied from banks. Lending to private sector marked an annual growth of 4% in real terms, providing an annual growth of 7.8 percent of monetary supply in January. All denominated credit continues to rule the lending activity, which mainly covers the businesses’ needs for circulating capital. January 2010 embodied a particularity, that is the improved state of the banking system assets denominated in foreign currency, has started to be mirrored on the growth of credit denominated in foreign currency. Notwithstanding, the stable increase of lending should be assisted by the re-activation of the demand for loans and the parallel easing of lending conditions as applied from the banking system. Bank of Albania deems that banking system should reveal more visionary in assessing potential sectors of economic growth and to take a more active role in encouraging the economic activity. Annual inflation in February 2010 pointed to 4.4%, exceeding by 0.4 percentage points the upper limit of the Bank of Albania target’s tolerance. The annual average inflation pointed to 2.6%.