TIRANA, April 6 /ATA/ The BoA Supervisory Council approved on Wednesday the statement and the Financial Stability Report for the second half of 2021.
The Bank of Albania says that, the Financial Stability Report is one of the important periodic documents drafted by the Bank of Albania, with the main aim of identifying and assessing the risks with which the financial system and its infrastructure operate. In the foreword of the document is the Statement of Financial Stability, the publication of which every six months is a requirement set out in the Law “On the Bank of Albania.”
The Bank of Albania estimates that in the second half of 2021, the activity of the banking sector developed steadily.
Deposits and loans grew rapidly, credit quality continued to improve and other indicators of financial stability remained at adequate levels. Overall, the banking sector’s exposure to risks was kept in check. Economic developments during 2021 were quite positive, although economic growth, decline of unemployment rate and supply-side shocks were accompanied by rising inflationary pressures at the end of the period.
According to the BoA, military aggression in Ukraine and sanctions against Russia have further exacerbated supply chain and supply disruptions, driving up the price of oil and gas, cereals and metals. The new projections indicate sustained inflationary pressures in the short run, which may be accompanied by rising production costs, declining consumption and investment, and in consequence a slowdown in economic growth.
The BoA states that, “the response of economic and financial policies to mitigate this shock is deemed appropriate amid significant uncertainties about geopolitical developments and the energy situation. The direct exposure of the banking sector to the countries involved in the above conflict is small and will not affect the indicators of financial stability of the activity. Indirect exposure is determined by the performance of the economy, macroeconomic stability and the performance of borrowers. These developments highlight the need for economic and financial policies to maintain elements of flexibility to respond in line with the dynamics of developments. As before, the importance of regularly assessing the degree of exposure to new risks and maintaining a proactive position when it comes to taking the measures to mitigate and cope with them remains relevant for the banking sector. In this regard, the Bank of Albania is ready to take all necessary actions according to the law, to support the banking activity and contribute to the stability of the financial system. ”
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