The Monetary Policy of Central Bank of Albania: Undertaken Contrasting Measures Against Global Crisis

Abstract

Important data regarding the growth rate and the macroeconomic balance preservation show that Albania has experienced an important challenge the last 5 years. The effects of the global crisis are indirectly spread into the Albanian economy, considering the fact that the most important commercial partners to Albania are Italy and Greece, two countries of Eurozone in serious financial and internal debt crisis. The spread of the financial crisis from USA to Europe has made it difficult to find credit in the market, which leads to incremental liquidity and credit risk, associated to interest rate increases, increased difficulties encountered by the private investors, lower consume and a high grade of economic uncertainty. Also, the prices of some important primary products such as petroleum are still located in high levels. What mentioned above, in Albania was translated into lower remittances (as almost 1/3 of the Albanian population emigrates in Italy and Greece). On the other part, the partner’s private sector difficulties to produce incomes have played an important negative role on the Albanian exports amount, causing a commercial deficit. Consume and private investments are also decreased. In order to contrast the crisis effect the Albanian government has grown its debt. This work will treat about the measures taken by the Albanian Central Bank, in order to avoid the foreign imported financial difficulties and risk and in order to stimulate growth, private investments and consume. The traditional and not traditional monetary policy tools and instruments will be analyzed, with special acuity towards all the macroeconomic indicators and the related effects. This paper aims to verify the effectiveness of the monetary policy in Albania through an accurate analysis, supported by empirical data in a range of five years.

DOI: 10.5901/ajis.2015.v4n2s2p218