How do you see Albania's role in the wider European and global economic landscape, and what measures are you taking to strengthen ties with other economies / EU and financial institutions?

Albania is a small open economy with a population of around 2.76 million people, and a market size of around 18 billion euros. In our journey to becoming a developed economy, integrated in the global value chains, we have naturally grown closer and more interconnected to the European Union (EU), reflecting the latter’s strong gravitational pull. 

The interconnectedness we have with the EU is material across several dimensions. For example, the EU is our largest trade partner with a share of around 70% of total trade, and our largest source of incoming foreign investment with a share of 54% of the total, while EU banks represent 40% of total assets and 45% of total capital in our banking sector. 

Beyond the statistics, the aspiration to join the EU has been and continues to be an important driver of institution building and development, and implementing a wide range of structural reforms. The political commitment of the Albanian authorities and the social consensus is pushing forward the accession process. After receiving the candidate status in June 2014, the EU decided to open accession negotiations with Albania in March 2020. The Albanian authorities are working closely with the EU to accelerate the reforms required for the accession.

We at the Bank of Albania are very invested in strengthening the ties with the EU. We have worked intensively to align our policy frameworks and regulatory and supervisory practices with the European System of Central Banks (ESCB). For some time now, we cooperate closely with the supervisory, recovery, and resolution colleges of the European subsidiaries operating in Albania, and with the European Single Resolution Board. Another continuous work-stream has been in the area of the payments systems, tackling its legal and regulatory framework as well as its infrastructure. In this regard, I would like to highlight the adoption of the Law on Payment Services to transpose PSD2, and the creation of the National Direct Debit scheme based on SEPA standards. A recent engagement is our participation in the Western Balkan Payment Modernization Project, which aims to spur the long-term economic recovery of the region, support the green and digital transition, and foster regional integration and convergence with the EU. 

Additionally, we are playing a pivotal role in the EU negotiation process by leading two chapters and providing support in many others. The current state of affairs will mean even closer ties with EU institutions, a better integrated financial market, and stronger visibility and impactfulness for Albania from a more global perspective. 

Can you explain what the 20-year partnership between Albania and the CEF represents for the Bank of Albania and its staff, and how would you describe this partnership?

First, on behalf of the Bank of Albania, I would like to express our appreciation for being with the CEF since its launch 22 years ago. Albania has embraced this initiative right from the beginning up to currently chairing the CEF Governing Board. Over the years, we have witnessed how the CEF has grown from a modest institution to a modern and mature knowledge hub, quite vocal in sharing knowledge and capacity building in the SEE region and beyond.

During these two decades, many Albanian professionals have had the opportunity to learn and get equipped with the latest knowledge and practices in economic and financial policies, administration of public finances, auditing, and other dimensions of governance. The feedback that we have collected shows a high level of professionalism, competence, and reputation of all the lecturers on one hand, and well-tailored learning programs on the other hand.
 
Considering the past and present in-depth relationship, I am quite confident that the partnership between Albania and the CEF will continue to strengthen in the future. Together we have constructed an effective hub, which has to be consolidated further with the contributions of every stakeholder toward full success.

As the Chair of the CEF Governing Board, how are you working with the CEF and other members to further strengthen the CEF's work?

Over time, the CEF Governing Board has been quite efficient and has shown great responsibility in fulfilling its duty. During our lead, we have tried to pursue the same path and philosophy, based on continuous communication and exchange of information with the CEF and other members. This process is materialized through an intensive dialog between all parties involved. We have held many sessions in the last 12 months to clarify matters, make suggestions and exchange opinions, while adhering to the most advanced principles of transparency and accountability. 

I take this opportunity to single out two important decisions of the Governing Board during my chairing. First, we approved of the Republic of Türkiye’s application for CEF membership, followed by inviting Türkiye to accede to the Agreement on Establishing the Center of Excellence in Finance (CEF). Second, we adopted the CEF 2023–2024 Work Program. This agenda consists of 207 activities across our thematic areas and learning formats and 10 knowledge products. The program strives towards a balance between the four thematic areas – public financial management, central banking, leadership for managing reforms, and learning and knowledge ecosystems. 

Finally, today we approved the CEF Annual Report 2022, a summary of another successful year. I am glad to witness a high degree of professionalism, commitment and work ethic in the entire CEF team. I would like to thank all of you for your dedication and expertise.

What steps has Bank of Albania taken to invest in the strategic development of human resources and effective institutional knowledge management? Can you provide any examples? 

It is important to recognize that the Bank of Albania continuously strives to further strengthen good governance. This is carried out through an array of activities aimed at increasing institutional independence, transparency and accountability, in accordance with the requirements arising from the process of gradual approximation of our legislation with that of the European Union.

It is worth pointing out that throughout the years, our Bank has properly ensured to have at its disposal sufficient human resources, both physical and financial, to fulfil its legal and strategic objectives. The importance of these objectives has made us pay special attention to employment relations and related policies, as well as the qualification and career development of our personnel. More importantly, our Bank has ensured the sustainable development of human resources, with a view to guarantee services and properly address new challenges. Through a further analysis of this strategy, the processes of the good administration of assets and financial resources will be improved. The practices followed will be further developed, using the best experiences and technical assistance of our colleagues, other central banks and financial institutions.

It is important to note that currently, the main processes and tasks of institutional knowledge management are focused on the identification of training needs, the publication of the most relevant and professional offers, and making all the necessary arrangements to enable the participation of employees in training at different levels. In addition, we organize training for new employees, where our most distinguished and senior employees attend as lecturers to provide help to the newcomers. The training of new employees at their workplace is continuously monitored and supervised by our HR staff. For new managers, we provide different mentoring to adapt them with their new roles and further develop their managerial skills. This particular training attempts to maximize their managerial potential and ensure the continuity of institutional values through increased communication and follow-up of best practices.

Where do you see the role of the CEF in this regard, i.e. in supporting central banks and public sector institutions in enhancing their capacities for institutional learning and knowledge management? 

As I mentioned before, the CEF has managed to build a strong knowledge sharing organization that addresses the topics of designing and implementing economic and financial policies, administration and control of public accounts, including HR capacity building. This is a good premise for the success of the CEF in the future. However, there is room for greater CEF involvement in supporting central banks and public sector institutions. What might be a potential lead for even stronger future engagement? I would suggest additional direct communication between the CEF and “first line” units. 

To be more specific, the CEF has to build potential direct bridges with the departments involved in designing and implementing monetary policy; supervisors of the banking industry and financial sector; departments in charge of building and supervising payment systems; other units involved in designing and implementing fiscal policies; agencies in charge of managing public administration; public audit bodies, and so on. Such direct communication would help the CEF better understand what the needs are and how to translate them into future learning programs. 

This process needs time and dedication. After many years as a member of the Governing Board, I am confident that the CEF team is committed in both directions. And I am optimistic that the CEF journey will continue on the right path, with the right motivation and devotion.

And lastly, the Bank of Albania and the CEF are jointly organizing a conference for high-level officials of central banks and finance ministries from South East Europe on green finance in June in Tirana. Can you share any updates or plans for the Bank of Albania's future initiatives and projects related to green finance?

As a central financial institution, the Bank of Albania is dedicated to the assessment and management of risks associated with climate and environmental changes, including their impact on price and financial stability. Therefore, the Bank of Albania takes green finance very seriously.

Recently, the Supervisory Council of the Bank of Albania approved the Bank’s strategy “Administration and Supervision of Climate-Related Financial Risks in the Financial Sector” for the first phase in 2023-2025. This strategy takes into account all these risks and defines a detailed action plan to deal with them in line with international best practices and the European Commission Action Plan. This detailed action plan, drafted with the assistance of and in cooperation with the World Bank (FinSAC), affects and includes all aspects and policies of the Bank of Albania from monetary policy and financial stability to the good administration of the Bank's daily operations and processes and the payment system.

However, we are still in the stages of recognizing and evaluating the effects and educating the public as well as also ourselves. Consequently, the current strategy focuses on educating the banking system and other partners in the financial system about the problems and needs for the inclusion and regulation of the activity in accordance with the requirements of green finance. An important part of this strategy is the incorporation of climate change-related work into the bank's organizational structure. This process will pave the way for the quantification of the effects and the design and implementation of the regulatory aspects in the second phase of the strategy. Specifically, the strategy foresees measures such as capacity building, research and knowledge dissemination, risk assessment and measurement, as well as national and international engagement.

Furthermore, the Bank of Albania is working on improving data availability and models and assessing climate-related risks. The Bank aims to adapt to global developments and new standards in the field of green finance. This includes raising awareness and educating the public and the financial sector about the importance of green finance and its role in addressing climate change and achieving sustainable development goals. To achieve these goals, the Bank of Albania cooperates with international partners, such as the CEF and the World Bank, sharing experiences and lessons from international best practices.

In the future, the Bank of Albania will continue to adapt to global developments and incorporate new standards into its approach. We will continue to build capacity and promote green finance in Albania, including improving data availability and deepening awareness of climate-related risks. Our goal is to influence the construction of a more sustainable and greener economy for the benefit of Albania and the region of South-Eastern Europe.