The Bank of Albania presented to Parliament its assessment of how it implemented the 2025 recommendations in the parliamentary resolution and said its 2025 work centered on strengthening the analytical basis for monetary policy, preserving financial stability and advancing alignment with European Union standards. Average inflation was 2.2% in 2025, below but close to the 3% target, while the central bank said a data-driven policy stance and the lek’s appreciation helped contain imported inflation. Under Albania’s free exchange rate regime, intervention was used to smooth sharp market movements rather than target a specific level, and foreign exchange reserves reached about EUR 7.3 billion at the end of 2025. On supervision, the central bank said the banking sector remained strong, with nonperforming loans at 3.8%, the lowest level since 2008, capital above regulatory requirements, stable liquidity and continued profitability. It nevertheless flagged concentration risk, foreign currency lending, real estate exposures, collateral quality and maturity mismatches for continued monitoring. In May 2025, it introduced caps on loan-to-value and debt service-to-income ratios for real estate lending, with tighter limits for foreign currency loans and homes bought for investment or rental. The bank also set supervisory expectations for climate and environmental, social and governance risk management, and said its legal reform package to align with EU and Basel standards includes a new banking law, stronger capital and large exposure rules, treatment of nonperforming loans, recovery plans, crisis intervention and depositor protection, alongside a pending European Banking Authority equivalence assessment. Beyond banks, the Bank of Albania said it intensified oversight of nonbank lenders, anti-money laundering and counterterrorist financing controls, cyber resilience and exchange offices. During 2025, it revoked two nonbank licenses and suspended one entity, completed banks’ cyber risk self-assessments, carried out 27 on-site inspections of exchange offices, imposed 201 fines and revoked 80 exchange office licenses. In payments, it said Albania upgraded national systems, adopted SEPA standards and enabled faster and cheaper electronic euro payments between Albania and SEPA participants from 7 October 2025, a change the German Economic Team estimates will save the economy more than EUR 71 million a year. The central bank also removed commissions on electronic payments up to ALL 40,000 and said further work is under way on a revised payments law and a TIPS Clone fast-payment system.
Bank of Albania2026-07-08
Bank of Albania reports progress on 2025 parliamentary recommendations with inflation at 2.2% and nonperforming loans at 3.8%
The Bank of Albania told Parliament it had implemented the 2025 recommendations while strengthening monetary policy, supervision and payments infrastructure. It reported average inflation of 2.2% in 2025, foreign reserves of about EUR 7.3 billion and a banking sector nonperforming loan ratio of 3.8%, alongside new real estate lending caps and broader EU-alignment reforms. The update also highlighted tougher oversight of nonbanks and exchange offices and SEPA-linked payment upgrades, including zero-fee electronic payments up to ALL 40,000.