100 years of Albanian central banking

100 years of Albanian central banking

IBNA Op-Ed/”We’re all aware of the importance of money in the day to day activities of our civilization. Money, lek, francs, ecu, Euros, dollars…financial means. You can call it whichever way you like. Money is important! It’s important not only for its functions, to pay, to save or to deposit, but also as a historical and artistic evidence of nations throughout centuries”

 

By Ardian Fullani

Governor of the Bank of Albania

The history of the consolidation of the Albanian state and Albanian currency has walked hand in hand with each other. We’re all aware for the importance of money in the day to day activities of our civilization. Money, lek, francs, ecu, Euros, dollars…financial means. You can call it whichever way you like. Money is important!

It’s important not only for its functions, to pay, to save or to deposit, but also as a historical and artistic evidence of nations throughout centuries. For those who believed in love for money represented the roots of all evil things. For generals, it was the strongest weapon of war.

For revolutionaries it represented the handcuffs of workers. But what is money? A mountain of silver or china plates and peaces of paper? How did we come to a time when money in most cases is invisible? More or less a group of numbers in computer screens? Where did money come from and how did it evolve?

To Albania, the bank is the second greatest victory after freedom. 100 years ago, on behalf of the Interim Government of Vlora, Ismail Qemal bey Vlora signed the first concession for the creation of an Albanian national bank.

History teaches us that central banking wasn’t born in a single day. It’s not linked to a special event and it’s not a product of an incidental event. Central banking was born as a result of the need of states to have an institution which would create and guarantee supply economy with money.

It was born as a need to fill the empty treasuries of kingdoms, to fund war campaigns, to expand territories and increase number of colonies and to absorb the consequences of economic and financial crises with the scope of bringing economy back to equilibrium.

Nonetheless, Albanian central banking has a different story. Ismail Qemali, this wise man, came up with the idea for the creation of the central bank, basing it in the concept of freedom, what this people had been lacking. In the inauguration of the bank, he says: “We are proud to say that the work of the bank is the second victory for Albania after freedom, both from the economic and political aspect”.

Every time I read this saying, I realize how easy it was for Ismail Qemali to express the necessity to consolidate independence won a year before with a solid financial foundation in order to create a prosperous society. Ismail Qemali perceived the creation of the bank as a financial institution, which should have offered economic development and stabilization of the Albanian independent state.

It’s not by sheer chance that in the speech held by him a few days after signing the agreement over the creation of the Albanian National Bank, Ismail Qemali said: “Since the very day that Albania had the chance to become a state amongst other states of the Balkan and Europe, it is entitled to have one and more banks in order to insure adequate crediting as a people and individual crediting for every Albanian.”

The words of this visionary are valid even today. I’m proud that today, 100 years after, thanks to many efforts, we have a modern central bank which enjoys the trust of the public and able to fulfill its main mission: stability of prices and finances of the country.

 

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Economic and financial crisis showed that the role of central banks is important for the stability and wellbeing of a country. Bank of Albania has fulfilled this mission with professionalism, by enabling a stable environment especially as far as the stability of the banking system is concerned. This has not been incidental.

I must stress that the Bank of Albania has been vigilant in monitoring the performance of the financial system before and after the emergence of crisis.

Thus, we have managed to consolidate the independence of this institution based on a communication with all actors of the market by preserving the concept “independence-accountability”. Transparency is the basis to decision making in the domain of monetary policy and that of the financial stability. At the center of our stances during the difficult period which was imposed upon us by the global crisis has been our effort to inject rational optimism in relation to the behavior of economic agents.

It’s necessary for this approach to be embraced and conveyed in the economy in the future by all policy makers, economic agents, financial market, including common individuals. At the essence of this philosophy stand the structural reforms to gain time toward sustainable pace of long term development of the country. /ibna/