Bank of Albania declaring "war" to euro

Bank of Albania declaring "war" to euro

 The total savings of banks in January stood at ALL 1 trillion, almost at the same level as in December, according to statistics published by the Bank of Albania today.

But the deposit stagnation has come as a result of the weak performance of savings in ALL, while those in foreign currency have continued to grow.

Data show that deposits in local currency amounted to ALL 468 billion, decreased to 1.2% compared to December 2017. This contraction comes after two consecutive months when ALL savings showed a positive trend.

The fall of January came entirely from the reduction of households' savings. This trend has been going on for several years already, as deposit interest rates have fallen to less than 1% for 12-month savings, causing individuals to turn to more lucrative alternatives.

By contrast, foreign currency deposits grew in January. Foreign currency savings stock amounted to ALL 533 billion, an annual growth of 1%. The increase would have been higher without the effect of the exchange rate (the euro is depreciated in relation to January last year). January is traditionally a month when banks see rising foreign currency due to the inflows of immigrants coming to holiday in late December. This month, the growth has come from both individuals and non-financial corporations, and the latter have given the highest impact.

The share of foreign currency deposits continued to grow, reaching a record level of 53.3% in January.

At the beginning of February, the Bank of Albania presented a plan of measures to reduce the level of euro usage in the country. The measures aim at limiting foreign currency lending to borrowers who do not have euro income, banks will now have to find alternatives where to invest the euro that is coming from the deposit. Deposits will also be discouraged, increasing the percentage of reserves in euros. In a hypothetical 100-euro deposit, the bank will harden in the central bank 12.5 euros in the form of a mandatory reserve of 10 euros that it deposited earlier, with more cost. While for every All 100 deposit, with the new package of measures, the bank will only reserve ALL 7.5 Lek from the 10 currently held, reducing the cost of holding the domestic currency.
Bank of Albania declaring "war" to euro Bank of Albania declaring "war" to euro Wednesday, February 28, 2018 Rating: 5
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