Bank of Albania Focuses on Risk Management, Transparency, and Financial Education

The Bank of Albania has made significant progress in ensuring the stability and security of the country’s financial system, according to a report presented to the Parliament’s Committee.

Key Focus Areas for 2022

• Risk Management: The bank focused on risk management, liquidity risk, governance systems risks, and assessment of transparency with clients.
• Liquidity Risk: Entities under monitoring, including banks and non-bank financial institutions, have been found to follow a prudential approach related to risk management, ensuring overall compliance with the regulatory framework.

Strengthening Resolvability

The bank has strengthened its resolvability by:

• Completing and communicating resolution plans for all banks, including resolution strategies, minimum requirements for financial assets, and requirements for increasing resolvability.
• Progress made in increasing financial capacities and ability to provide operational continuity during resolution processes.

Payment Systems Management

The Bank of Albania managed payment systems, ensuring maximum availability and safe and effective functioning throughout 2022. Notable achievements include:

• The introduction of the AIPS EURO system has saved Albanian businesses and consumers around EUR 10 million since its launch in January 2022.
• Effective management of international reserves, maintaining liquidity and security despite market volatility.

Currency Issue

The bank completed the circulation of a new series of Albanian banknotes with denomination of 10,000 Lekë, featuring contemporary security features. An educational campaign was conducted to promote awareness of the new notes.

Enhancing Transparency and Accountability

• Drafted and implemented a “National Strategy of Financial Education and Inclusion” to improve financial literacy and inclusion among the general public.
• Strengthened governance systems by updating risk management systems and ensuring business continuity with best international practices.

Future Outlook

The Bank of Albania expects:

• Inflation to reach its target in 2024, driven by global market stability and monetary policy normalization.
• Economic growth to maintain stable rates in the medium term, despite short-term volatilities.

Conclusion

The Albanian banking system appears liquid, profitable, well-capitalized, and able to carry out its primary function of financial intermediation and preserving household savings. The bank will continue to monitor the situation and take care of regulatory framework alignment with EU acquis communautaire. Additionally, the bank emphasized the importance of continuing structural reforms as an essential instrument for growing the economy’s potential, enhancing resilience against adverse shocks, and increasing societal welfare.