I am confident we have made the right choice as it has produced more security for the stability of both the banking system and the deposits of Albanian citizens. Third, in the recent negotiations with the International Monetary Fund and the World Bank, under the conditionalities of the new arrangement that will be approved today by the IMF Executive Board, we have agreed to include the write off of banks’ loss loans that are provisioned and have no hope of being collected, having no financial effect on the banking system. Amendments are formalised in a draft law that is expected to be passed by the Assembly in the near future. Fourth, the recovery of lending is considered one of the main instruments contributing to improving the level of non-performing loans. I would like to dwell a little longer on this aspect. Despite some optimistic developments in terms of the increased number of credit applications submitted for execution or restructuring, the larger banks, which have considerable potential to lend, are not using properly the measures promoting lending recovery, as opposed to the smaller banks, which appear more active. We believe the main reasons forestalling a more significant effect of these measures are as follows: First, actions taken to boost credit supply need to be complemented by other actions to boost credit demand. The latter remains unstable in the face of sluggish economic growth and weak consumption and investments.
As a result, credit risk perception by banks remains considerable; Second, in spite of a better reflection of the key interest rate cut in the last quarter of 2013, the credit price (including other related costs) is considered still relatively high. For that 2  BIS central bankers’ speeches  reason, banks need to cut the credit price down, having better control of their operational costs, especially foreign currency funding costs. Third, credit restructuring should be conceived as a broader process of deep restructuring of the activity of borrowing businesses. Each non-performing loan should be seen as a new opportunity. Our approach should extend to the micro level, according to the motto: door to door and case by case. From the bank’s perspective, this would mean that credit restructuring is not merely a rescheduling of credit instalments in agreement with the businesses, but an in-depth analysis to assess the possibilities of its future existence in the market and acknowledge on time the loss of a part or full credit value. Fourth, infrastructure and legal practice concerning collateral execution remains subject to adaptation to the new situation. Fifth, it may be necessary to allow longer time to see the effect of the measures taken until now, and other measures that should further address the above-listed problems. Despite the existing problems listed above, the Bank of Albania believes that the circumstances are better for banks to be more active in this year in tackling non-performing loans.