Decisions of the Supervisory Council, 6 September 2017

On 6 September 2017, the Supervisory Council of the Bank of Albania reviewed and decided to:

• Approve the Financial Stability Statement and Report, 2017 H2

The Financial Stability Report is an important periodic document prepared by the Bank of Albania whose main purpose is to identify and assess the risks facing the financial system and its infrastructure. The Financial Stability Statement, whose half-yearly release is a legal requirement stemming from the Law "On the Bank of Albania", prefaces the Report.

In this Report, the Bank of Albania considers that the activity of the banking sector and of the financial system overall has been stable during 2017 H1 and its resilience to operational risks is good.

Generally, the performance of macroeconomic indicators and developments in the overall economic environment supported better the activity of the financial system. In the banking sector, indicators of the financial performance, capitalisation and liquidity of the activity, improved overall. However, the analysis of the determinant factors and stress test exercises suggest that the performance of these indicators needs to be monitored over time. Developments in the banking sector over the period showed a significant improvement of the credit quality and affirmed that it is important for the process to continue.

The full Financial Stability Report will be published in the coming days on Bank of Albania's website www.bankofalbania.org

• Approve the Regulation “On reporting the interest rates statistics at the Bank of Albania”.

The purpose of this Regulation is to define the requirements on reporting procedures and timelines of interest rates statistics at the Bank of Albania by the reporting entities.

The Regulation enables the drafting of interest rates statistics in accordance with the European standards defined in the Regulation No. 1072/2013 of the European Central Bank (ECB/2013/34).

At present, the Bank of Albania collects drafts and publishes statistics of the interest rates applied by banks on new amounts of deposits and loans, by terms, for households and non-financial corporations, but the new Regulation aims to broaden the range of these statistics.

• Approve some amendments in the Regulation "On risk management in the activity of non-bank financial institutions" and some amendments in the Regulation “On the granting of license to non-bank financial institutions"

The main purpose of reviewing these two regulations is to continuously supplement and improve the regulatory framework of licensing and risk management of non-bank financial institutions activity. The proposed amendments to the risk management Regulation are mainly driven by issues observed during the supervision process, and aim to address them, but at the same time create some facilities for the entities in carrying out their financial activity.

• Approve the Regulation “On the functions of the management structures in the decision-making process on the foreign currency reserve management”

The content of this new Regulation is the result of the review of the existing Regulation and the main changes implemented are in two directions:

• First, in the new Regulation there is a new and more comprehensive definition of the foreign currency reserve, in accordance with the definition suggested by the IMF in the relevant guiding documents and the terminology used in practice when referring to the reserve.
•  Second, the new Regulation reformulates and supplements the competencies of each decision-making link engaged in fulfilling the foreign currency reserve management function, based on the established experience/practice, but also taking into account the best practices or experiences of counterpart institutions. These changes, at the same time, aim at more flexibility and increased efficiency in the implementation of the decision-making process, in accordance with the various situations that the central bank/monetary authority may face in the framework of foreign currency reserve portfolio management or the use of the foreign currency reserve fund in light of the policies pursued by the institution.

The Supervisory Council was also informed on the daily functional and operational activities of the Bank of Albania.