Should the Bank of Albania Change Its Main Objective?
Should the Bank of Albania Change Its Main Objective?

Author(s): Vladimir Mici
Subject(s): Politics / Political Sciences, Politics, Economy, National Economy, Economic policy, Financial Markets
Published by: Университет за национално и световно стопанство (УНСС)
Keywords: Central Bank; price stability; economic growth; full employment
Summary/Abstract: The circumstances and phases of Albania's development have resulted in a market where different currencies, particularly the dollar and the euro, are freely traded. There are further currencies available. The circumstances are important since there are a lot of transactions in these foreign currencies, and in everyday speech, you might find safe marketplaces where these transactions are used only or nearly only in these currencies. The Albanian Lek (ALL) seriously undermines the Central Bank's role as a protector of price stability. This is due to the fact that the Albanian Lek (ALL) fails to provide the prerequisites for achieving and maintaining price stability. The Law "On the Bank of Albania" says that "achieving and maintaining price stability" is its fundamental objective. The legislation's definition of this objective ensures the independence of the Central Bank. The central bank's instruments aim to promote economic growth, productivity, and employment in addition to price stability in order to guarantee an efficient monetary policy. By examining the central bank's policies in connection to economic development, employment, and performance, as well as the European Union, we try to analyze this phenomenon. Stated differently, objectives will be viewed as reacting to the economic situation and growth rates. The central bank must, however, define or provide an understanding of the word "price stability" in order to be open and accountable. Some of the challenges that arise in the pursuit of the main objective include defining the inflation category that the central bank chooses as a target while maintaining a balance between accountability and independence, credibility and transparency, and defining what it means to achieve and maintain price stability.

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