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Opinion / Editorial

Challenges of the Central Bank

Challenges of the Central Bank

The Annual Report of the Bank of Albania provides a detailed description of its response to the pandemic crisis during 2021 and the significant increase in prices in international markets in the second half of 2021. Assessing the progress made in strengthening professional capacity, supporting the processes of European integration, strengthening the capacity for extraordinary intervention in commercial banks, strengthening the internal governance systems of the institution and increasing the research activity within the central bank, I want to highlight some challenges that the Bank of Albania should keep in mind in order to face them in the near future.

First, maintaining the monetary and financial stability of the country, in compliance with its legal mandate. This resilience today more than ever has been put to the test, due to the sharp decline in the level of consumption that is expected to come after the end of the summer tourism months. Starting from mid-September 2022 onwards, the extraordinary pressure of extremely high international prices, not only of fuel and electricity, but also of basic food, will force Albanian families and small enterprises to significantly reduce the consumption of tire. The first signs are visible in this period of governance of some major markets with transparency boards and these signs will come to be highlighted in the period September-December 2022 and beyond. As a result,      

Secondly, the problems observed during 2021 related to the prevention of money laundering, electronic signing, concluding distance contracts and promoting the use of electronic documents and necessary information during the online applications of citizens at banks. The year 2021 brought the discovery of a money laundering scheme at the level of 18 million euros, of the Italian entrepreneur Francesco Zummo, suspected of links to the Italian mafia, near a second level bank in Albania, through transfers from fictitious oil companies. This case should serve us for a deep reflection of all the efforts made by the law enforcement institutions of the country, in cooperation with the Bank of Albania, to prevent money laundering through our banking system. The 2021 report of the Directorate for the Prevention of Money Laundering speaks of a doubling of the number of money laundering cases over the past year and our banking system is not immune to this phenomenon. The Bank of Albania should help with all its capacities in facing the challenges of electronic signature, concluding distance contracts and the increasingly frequent use of electronic documents by entrepreneurs and citizens during their online applications for loans or other services. banking. All this would further facilitate the digitalization, not only of payments, but also of other services, such as lending and investment, contributing significantly to the common goal of formalization and sustainable economic growth, in extremely challenging years for the country. The Bank of Albania should help with all its capacities in facing the challenges of electronic signature, concluding distance contracts and the increasingly frequent use of electronic documents by entrepreneurs and citizens during their online applications for loans or other services. banking. All this would further facilitate the digitalization, not only of payments, but also of other services, such as lending and investment, contributing significantly to the common goal of formalization and sustainable economic growth, in extremely challenging years for the country. The Bank of Albania should help with all its capacities in facing the challenges of electronic signature, concluding distance contracts and the increasingly frequent use of electronic documents by entrepreneurs and citizens during their online applications for loans or other services. banking. All this would further facilitate the digitalization, not only of payments, but also of other services, such as lending and investment, contributing significantly to the common goal of formalization and sustainable economic growth, in extremely challenging years for the country. 

Third, despite the gradual decline in the level of non-performing loans in recent years, the slowdown in economic growth and the decline in consumption will inevitably lead to increasing difficulties for entrepreneurs and citizens to adhere to contractual repayment obligations on time. of loan installments they have received. Based on a good experience of assistance provided to commercial banks in restructuring many non-performing loans, the Bank of Albania should not only maintain the current pace, but intensify its efforts for concrete assistance to enterprises and citizens in healthy or promising economic condition, but in temporary liquidity difficulties.    

Fourth, a sharp problem is the still inflated cost of payment systems in the commercial bank market, ie in the service of bank transfers for citizens and entrepreneurs. The media continue to denounce almost daily dissatisfaction of entrepreneurs and citizens, not only for the long time of processing a bank transfer, but also significantly higher costs of bank transfers, compared to identical transfers in other countries in the region.

Fifth and last but not least, I believe that the Bank of Albania should contribute more and more strongly to the responsibilities of its legal role of fiscal agent and advisor to the government, in light of some policies fiscally undertaken by the government recently, quite contested by the business community and various interested groups of citizens, such as farmers, freelancers, etc. I propose for our central bank the preparation and implementation of a medium-term Strategy 2022-2024 of Coping with the Cascade Effects of Increased International Prices on our economy, in close cooperation with the Ministry of Finance and Economy, as well as with other central institutions and those independent, with civil society, the media and other stakeholders. Extremely high international prices for goods and services, according to the professional forecasts of World Bank experts in their latest surveys and studies, will continue to remain so until the end of 2024. For us it is necessary to work together , filtered through a coherent strategy and a concrete action plan. This strategy should serve as a guide for the BoA in its actions to promote bank credit and consumption, as well as, at the same time, to keep healthy and stable the key performance parameters of the banking market and the country's financial sector as a whole. For us, a joint work is necessary, filtered through a coherent strategy and a concrete action plan. This strategy should serve as a guide for the BoA in its actions to promote bank credit and consumption, as well as, at the same time, to keep healthy and stable the key performance parameters of the banking market and the country's financial sector as a whole. For us, a joint work is necessary, filtered through a coherent strategy and a concrete action plan. This strategy should serve as a guide for the BoA in its actions to promote bank credit and consumption, as well as, at the same time, to keep healthy and stable the key performance parameters of the banking market and the country's financial sector as a whole.