In contrast, the need for adjustment is less in those large corporations whose growth has largely been based on increased geographical diversification. All the foregoing factors will influence the pattern of exit from the recession. The need to reduce debt levels will, coupled with fiscal consolidation demands, continue to limit the possibilities of expanding domestic spending, meaning that the recovery should turn on net external demand. At the same time, it is necessary to begin to reverse the dynamic of external debt, which will require further progress in attaining a more balanced foreign trade position, overcoming the obstacles posed by the high investment income component and the dependence on energy imports. A pick-up in competitiveness will thus be pivotal if external demand is to stand in for the shortcomings of domestic demand and boost growth on the supply side, which in the current circumstances is the only way forward. To overcome the crisis an economic policy geared to the medium term is needed to help complete the correction of the macroeconomic imbalances still in place, to further the restructuring of all sectors and to allow the structural reforms outstanding to be tackled. BIS central bankers’ speeches  3  Fiscal consolidation is unavoidable if growth in the medium term is to be restored, despite the fact the scale and timing of the adjustment required may have adverse effects in the short term. This is the only strategy available for restoring market confidence.
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.