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Bank of Albania

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Bank of Albania
Banka e Shqipërisë
HeadquartersTirana
Established2 September 1925 [1]
GovernorGent Sejko
Central bank ofAlbania
CurrencyAlbanian Lek
ALL (ISO 4217)
Websitehttp://www.bankofalbania.org/

The Bank of Albania (Albanian: Banka e Shqipërisë) is the central bank of Albania based in Tirana. The bank of Albania has considerably evolved since being established, in contour with economic, political, and social developments. The main headquarters of the bank is in Tirana. The bank also has five other branches located in Shkodër, Elbasan, Gjirokastër, Korçë, and Lushnjë.

History

The history of the Bank of Albania started when it was founded back in 1925, which was first named the National Bank of Albania, up until 1944. It then transformed into the State Bank of Albania that lasted from 1944 till 1992. In 1992, the Bank of Albania was established, which shares the same features of a modern central bank.[2]

Bank Overview

The primary goal of the Bank of Albania is to accomplish and sustain price stability. Collaborating with obligations developing from law, the Bank of Albania practices and applies policies of reaching its primary goal of keeping inflation under control. Along with their primary goal, the Bank of Albania promotes and supports the development of the foreign exchange regime and system, the domestic financial market, the payment system, and contributes to improving monetary and lending conditions.[3]

One of the roles of the Bank of Albania is that it acts as manager of the county’s currency by balancing the currency in circulation and credit with in the economy. This role is important because allowing too much currency into circulation will end up leading to inflation and allowing less currency in circulation will prevent the economy to grow. As acting currency manager, the Bank of Albania pursues to reach equilibrium between two extremes, which is to promote economic growth by maintaining price stability. [4]

Another role of the Bank of Albania is that it acts as the fiscal agent to the most important client in the country, which is the Albanian Government. Since being the central Bank of Albania, the bank performs a wide range of financial services dealing with billions of Albanian Leks. The Government of Albania keeps an open account with the bank, through which it makes many domestic and international financial transactions. The Treasury operations, which consist of receipts and expenses made by the government is not carried out within the Bank of Albania, but through commercial banks. [5]

The Bank of Albania is mandated by the Government to supervise and regulate all activity of banks and institutions operating banking activity within the country. The Bank of Albania enforces rules on the establishment of banks and institutions and licenses them. The bank also supervises and monitors all activity of these institutions to ensure that they follow and obey the laws and regulations. [6]

Monetary Policy

The Monetary Policy of the Republic of Albania is an exclusive right of the Bank of Albania. The Policy is designed to achieve the primary goal, to achieve and maintain price stability. The architect of coming up with the policy is based on, the respective legal framework, the academic background employed for modeling and predicting inflation on suitability of the operational target and the set of monetary instruments used to finalize the monetary policy goals. [7] The Bank of Albania is committed to achieving and maintaining annual inflation at 3.0%, with a tolerance band of +/- 1 percentage point. The current annual inflation for the third quarter of 2014 is at 1.7%. [8]

The Bank of Albania manages open market operations through the purchase or sale of securities. These transactions play a main role in the transmission of monetary policy in the banking system. The main reason of using open market operations is the short-term liquidity management of the banking system and trying to stabilize market interest rates.The standing facilities are tools available to banks at their own initiative without restriction under normal circumstances. They consist of tools providing and absorbing overnight liquidity. The interest rates and these tools provide a passage in which the money market interest rates can fluctuate. The minimum reserve requirements serve as a tool targeting at regulating the banking system liquidity and stabilizing the money market interest rates. The amount of minimum reserves to be held by each commercial bank is determined in relation to its reserve base applying the required reserve ratio. This ratio is also the same for the Lek and foreign currency liabilities. The current required ratio is 10 percent. The Bank of Albania’s minimum reserve system allows banks to use the averaging provisions. Banks are allowed to 40 percent if their required reserve. They must show the average of the reserve balance will not be less than the reserve requirement by the end of the maintenance period. Required reserves denominated in the Albanian currency are reimbursed at a rate derived from the base rate, while holdings of required reserves in foreign currency are also reimbursed at a rate derived from the base rate of the European Central Bank and Federal Reserve. [9]

Governors

The Governors after 1992 have been:[10]

  1. Prof. Assoc. Dr. Ilir Hoti (May 1992 - September 1993)
  2. Dylber Vrioni (September 1993 - December 1994)
  3. Kristaq Luniku (December 1994 - April 1997)
  4. Qamil Tusha (April 1997 - August 1997)
  5. Prof. Dr. Shkëlqim Cani (August 1997 - October 2004)
  6. Ardian Fullani (October 2004 - September 2014)[11]
  7. Gent Sejko (February 2015 - present)


- Elisabeta Gjoni (Interim) (September 2014 - February 2015)[12] [13]

See also

References

  1. ^ http://www.kohajone.com/html/artikull_11686.html
  2. ^ Bank of Albania (n.d.). "A brief history of the Bank of Albania". bankofalbania.org. Bank of Albania. Retrieved 26 November 2014.
  3. ^ Bank of Albania (n.d.). "Main Objective". bankofalbania.org. Bank of Albania. Retrieved 26 November 2014.
  4. ^ "Manager of The National Currency". 2004. Retrieved November 23, 2014.
  5. ^ "BoA-Fiscal Agent." Www.bankofalbania.com. N.p., 2004. Web. 23 Nov. 2014. <http://www.bankofalbania.org/web/BoA_fiscal_agent_88_2.php?evn=link_Me&evb=middle>.
  6. ^ "Supervisor and Regulator." Www.bankofalbania.com. N.p., 2004. Web. 23 Nov. 2014. <http://www.bankofalbania.org/web/supervisor_and_regulator_89_2.php?evn=link_Me&evb=middle>.
  7. ^ "Monetary Policy." Www.bankofalbania.org. N.p., 2004. Web. 23 Nov. 2014. <http://www.bankofalbania.org/web/Monetary_Policy_8_2.php>
  8. ^ Albania, Bank Of. Monetary Policy Report 2014 Q3. Tirana: Bank of Albania, Oct. 2014. PDF.
  9. ^ "Operational Framework of Bank of Albania." Www.bankofalbania.org. N.p., 2004. Web. 23 Nov. 2014. <http://www.bankofalbania.org/web/Monetary_Instruments_10_2.php>.
  10. ^ The Governor of the Bank of Albania, Bank of Albania
  11. ^ http://www.bankofalbania.org/web/BANK_OF_ALBANIA_7127_2.php?kc=0,26,0,0,0
  12. ^ http://www.bankofalbania.org/web/cv_Gjoni_ang_6651_2.php
  13. ^ http://www.reuters.com/article/2014/09/07/albania-cenbank-sacking-idUSL5N0R80L420140907

The Bank of Albania [1] Retrieved on 01-03-2009.

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