Chart 8: EM foreign currency debt as a share of GDP Per cent of GDP 22 21 20 19 18 17 16 15 14 13 12 95  97  99  01  03  05  07  09  11  13  15  17  (a) Excludes China, non-bank borrowers only. Sources: IIF and BIS. Despite these vulnerabilities, the Bank’s analysis finds that, for EMEs as a whole, reforms to domestic institutional “pull factors” have substantially increased the sustainability of capital flows and so shifted the distribution of capital flows to the right (Chart 9), all else equal. 9  All speeches are available online at www.bankofengland.co.uk/speeches  9  Chart 9: Pull factors have reduced Capital Flows-at-Risk for EMEs since the Asian Financial Crisis Probabilty density 0.12 0.10 0.08 0.06 0.04  B  A  0.02 0.00 -8  -6  -4  -2  0  2  4  6  8  10  12  14  16  18  Capital flows as a % of GDP 2008-2018 Post-2008 crisis  Asian Financial Crisis  Sources: IMF and Bank staff calcluations. Notes: Chart shows the contribution of pull factors to capital flows to EMEs during the Asian Financial Crisis (purple), and since 2008 (green). In both distributions push factors are held at their sample average, so only pull factors are changing. See chart 5 and annex for further details. Push factors Unfortunately for EMEs, all else has not been equal.
They are indispensable to avoid any room that may be used for abusive actions that would impair the institution. I therefore request that you take the necessary measures in terms of financial, human and technological capacities in order to ensure the safety of each banking operation. In pursuing its supervisory function, the Bank of Albania will have this matter under close focus and I assure you that any decision that may have hampered the safety of the activity will be handled with utmost stringency by the law. In a broader context, banking activity, in addition to operational risks, is faced with other financial-related risks. We will therefore increase the regulatory requirements for banks to be engaged in an integrated process of risk evaluation and management proportionate to the level of development and sophistication. In a more practical approach, this implies that banks should have specific functional structures that monitor risks in the main activity areas and endeavour to anticipate their possible evolution and impact on banks’ activity. These structures must be  2  BIS Review 174/2010  in place in the largest banks and their products should be an integral part of the decisionmaking process. Dear participants, We are leaving behind a challenging year but other numerous challenges will follow for banking activity. They provide us the opportunity to put our vision into practice, in order to ensure a stable banking activity as a precondition for conducting an efficient intermediation activity with remarkable contribution to economic development at home.