In an address to a parliamentary committee, Governor Sejko presented the Bank of Albania’s assessment of how it implemented the Assembly’s 2025 recommendations and summarized the central bank’s main policy and supervisory actions. The update highlighted stronger macroeconomic forecasting and data-driven monetary policy, with inflation averaging 2.2% in 2025 against the bank’s 3% target, alongside continued exchange rate flexibility, cautious foreign exchange intervention and foreign reserves of EUR 7.3 billion at end-2025. It also framed the bank’s work around closer coordination with fiscal analysis, risk-based supervision, payments modernization and alignment with European Union and Basel standards. On financial stability, the bank pointed to robust banking sector indicators at end-2025, including a non-performing loan ratio of 3.8%, capital above regulatory requirements, stable liquidity and profitability, while flagging continued monitoring of real estate lending, foreign-currency lending, sectoral concentration, collateral quality and maturity mismatches. To address property-market risks, it noted that in May 2025 it approved caps on the loan-to-value ratio and debt service-to-income ratio for mortgage lending, with tighter limits for foreign-currency loans and loans used to buy residential property for investment or rental purposes. The address also covered expanded supervisory work on climate and environmental, social and governance risks, cybersecurity and anti-money laundering controls. In 2025, two non-bank financial institution licenses were revoked and one activity was suspended, while 27 on-site examinations of foreign exchange bureaus resulted in 201 penalties and 80 license revocations. Next steps include advancing a new banking law and related reforms on capital requirements, large exposures, non-performing loans, recovery plans, crisis intervention and deposit protection, as well as a new act on digital operational resilience. The bank is also awaiting the European Banking Authority’s final equivalence assessment. In payments, it said electronic euro transfers with participating SEPA countries have been faster and cheaper since 7 October 2025, while domestic electronic payments up to ALL 40,000 are free for citizens, and further work will focus on revising the Law on Payment Services and building a TIPS Clone System based on the European Central Bank model.
Bank of Albania2026-07-08
Bank of Albania reports to Parliament on 2025 implementation with mortgage caps SEPA integration and tighter supervisory action
In an address to Parliament, the Bank of Albania set out how it implemented the Assembly’s 2025 recommendations, highlighting stronger monetary policy analysis, risk-based supervision and closer alignment with European standards. The bank cited inflation of 2.2% in 2025, foreign reserves of EUR 7.3 billion and a banking sector non-performing loan ratio of 3.8%, while noting mortgage lending caps introduced in May 2025 and stronger supervisory action in non-bank finance and foreign exchange bureaus. It also pointed to SEPA-linked payment modernization and further legal reforms on banking, digital resilience and payment services.