The Policies of Bank of Albania for Providing Financial Stability The Role and the Effects of the Macroprudential Instruments 2006-2014 - Economicus

by, Orkida Ilollari

Abstract

This study is an attempt to look onto the hypothesis, forecasts and questions that are now at the center of the economic world debates on ensuring financial stablity. The purpose of this study is to give a contribution in improving the use of the macroprudential instruments and the real impact they have on the economy. This study aims to collect and analyse data in assessing the performance of the macroprudential instruments, to create institutional regulations in regards to monetary policy and to make a prediction about the right moment when these instruments should be activated. It may be possible that crises are less costly for the economy and achieve the financial stability. These macroprudential instruments, adapted acording the characteristics of each country, may be able to utilise all the appropriate means to contain the systemic risk.The main focus of this study is to analyse the monetary policies and the macroprudential instruments used by central banks as the supervisory authorities in ensuring financial stability. As also stated by the IMF in its report: “Lessons from the Crisis” (May, 2010b), macroprudential supervision policies are the main instruments to ensure the financial stability”.The macroprudential instruments include the inherited requests and the accumulation of the capital in the perspective of the provisions of liquidity indicators and the prudential assessment of the collateral. The implementation of the macroprudential instruments involves directly the European Central Bank whose objectives are not limited to the traditional control inflation and output gap. The latter are focused on the accumulation of risks in the financial system of a macroprudential nature to gain an increased resilience of the financial system. Central bankers should consider the consequences of their decisions on the financial stability. They are often called as “the defenders of the currency”. In this study we aim to examine the issues mentioned above and lead the reader in exploring an important topic to the global economy and macroprudential measures taken by central banks to manage the recent crisis.