Market actors on banking system in 2007

TIRANA, March.26 – BoA organized the meeting “Banking system in 2007: The governor communicates with market actors” as part of its strategy to expand the communication and collaboration with all engaged market actors and the public in general. The event was attended by representatives of second level banks, credit agencies, businesses and journalists. For a more efficient monetary policy the bank has expanded the institutional dialogue. The participants discussed matters of liquidity management, market expectations, financial system and the consolidation of the banking system. Governor Ardian Fullani opened the meeting with a brief summary of the economic developments in 2006. He commented one economic growth and stable prices, with general inflation levels at target rate 2.4 percent. Consumption and investment levels have increased given low interest rates and stable exchange rates. Credit amounts have reflected this trend increasing as well. BoA has shifted her policies accordingly, changing twice the interest rate to 5.5 percent for better risk management. The bank has been an active party in promoting stable price levels.
Regarding liquidity management Fullani stressed that short term liquidity management should be brought in line with long term policy decisions. Boa is designing policies to manage the money market aiming at a more liquid banking network as well as a more careful approach of second levels banks in administering liquidity surpluses.
A new program regarding a study of market trends and expectations was also promoted in the meeting. Fullani sad that it is a new challenge for the banking system to have accurate and well informed guesses about changes in important indicators as inflation, interest rates and exchange rates. He called for the banks to implement research centers for this purpose.
Fullani put the stability of the financial system at the same priority rank with the macroeconomic one. He called for more attention to the fact that the banking system, despite being a powerful actor in development can bring along different risks. Fir this purpose Boa has decided not only to intensify monitoring practices but to create a special unit called “The Financial Stability Department.” BoA’s Fullani called upon banks to strengthen their risk management sectors and specialize in managing market related risks, credit specific risks as well as operational capacity risks. This requires both human resources and an investment in high information technology, Fullani explained.
The other participants in the meeting evaluated the new communication practice very positively. This is a sign of BoA’s maturity and concern for the actors of the market that are influenced by its decisions. Business representatives discussed concerns related to the legal framework in general and to collateral requirements of the second level banks. The meeting is just the start of a new tradition of BoA to keep other interested parties engaged in a constant dialogue