In parallel, it amended the regulatory and supervisory framework to adapt it to the new financial conditions and approximate it with the new international standards. With regard to the latter, we have worked to gradually transfer the supervisory practices from Basel I to Basel II system. 4  BIS central bankers’ speeches  In view of integrating the Albanian banking system with the European one, we have intensified the cooperation with counterparts in other countries. Bank of Albania’s membership into Vienna Initiative 2.0 Steering Committee was particularly important in this regard. This initiative is a platform of cooperation, which brings together the European Commission and other institutions of the European Union, international banking groups that operate in Central, Eastern and South-eastern Europe, as well as authorities from home and host countries. Its main objective is to promote coordination between home and host country authorities, to avoid disorderly deleveraging. Given that the Albanian banking system is dominated by cross-border banking groups, decisions from the Vienna Initiative 2.0 have considerable effects on it. Therefore, our participation in the decision-making process is very significant. Albania is the only non-EU member country participating in Vienna 2.0. As such, it also represents the interests of other non-EU countries that are not represented in the Steering Committee. For all these reasons, I believe the involvement of the Bank of Albania in Vienna Initiative 2.0 is an important institutional achievement.
The international component is particularly apparent in that the majority of banks today conduct a considerable amount of business in several EU countries. At the same time, the responsibility for supervision and crisis management remains at the national level. This entails obvious risks of coordination problems and conflicts of interest between countries, which naturally do not promote financial stability. It is therefore necessary that organisations for supervision and crisis management be coordinated within the EU. Lower repo rate in the wake of the crisis The escalating crisis intensifies the downswing in the Swedish economy, which was already apparent. As can be seen in the Monetary Policy Report from 23 October, our growth forecast for next year has been revised sharply downward to the prospect of zero growth. To alleviate the real economic effects of the financial crisis, over a short period the repo rate was cut by one percentage point to the current level of 3.75 per cent. Our forecast for the repo rate shows that in the future it may need to be lowered by an additional half percentage point over the course of the next six months. We can do this without jeopardising the inflation target. It is mainly rising commodity prices in the global market, such as the price of oil and food, that have driven inflation upwards. Now that the price trend for these commodities has broken and turned downwards, the rate of inflation will drop rapidly. At the same time, domestic inflationary pressure will be eased by the weaker economic trend.