Bank of Albania
| Company type | Central bank |
|---|---|
| Industry | Banking, Financial services |
| Founded | 1925 |
| Headquarters | Tirana , Albania |
Area served | Albania |
| Products | Issuing national currency (Albanian lek), monetary policy, banking supervision |
The Bank of Albania () serves as the central bank of Albania, responsible for issuing the national currency, the Albanian lek. Its main office is located in Tirana, with five additional branches situated in Shkodër, Elbasan, Gjirokastër, Korçë, and Lushnjë. Additionally, it maintains a Research and Training Center based in Berat.
Originally established in 1925 in Rome under the name National Bank of Albania (, , abbreviated BKS or BKSH), it was succeeded in 1945 by the state-run Albanian State Bank headquartered in Tirana (, BSS or BSHSH). The institution adopted its present designation in 1992.
Background
After Albania proclaimed its independence on 28 December 1912, the nation lacked a central banking system despite multiple efforts to create one. Under the direction of Ismail Qemali, a "National Bank of Albania" was formed on , primarily controlled by foreign financial entities including Austria's Wiener Bankverein and Italy's Banca Commerciale Italiana. This foreign dominance provoked an uprising in May 1914 against the nominal rule of Wilhelm von Wied and the practical leadership of Essad Toptani. The banking initiative ceased operations within a few months.
Throughout World War I, Albania experienced monetary instability during foreign occupations, with foreign currencies prevailing in circulation. By the early 1920s, various Albanian municipalities issued their own banknotes. A League of Nations proposal envisioned establishing a central bank as a joint enterprise supported by European governments, with Albania holding only a 10% ownership stake.
National Bank
Following the establishment of the Albanian Republic and political stabilization under Ahmed Zogu, a more reliable financial system was created, albeit heavily influenced by foreign powers. On , Albanian officials and Italy’s Credito Italiano, represented by Mario Alberti, signed an agreement to form the National Bank of Albania headquartered in Rome but operating within Albania. This agreement was approved by the Albanian parliament on , officially founding the bank on .
The initial capital was divided among investors from Italy, Albania, Yugoslavia, Switzerland, and Belgium. Although Albanians were expected to own half of the 12.5 million gold francs capital, their limited capacity or interest resulted in Italians holding majority control. The bank’s foundation included 100,000 founders' shares entirely owned by Italians—primarily Credito Italiano—and 495,000 common shares distributed among various shareholders such as notable Albanians Eqrem Vlora (11.7%) and Nexhat Pasha Vlora (10.5%), alongside Yugoslav and European banking institutions.
Despite its title, the National Bank of Albania functioned independently from Albanian governmental control and has been characterized as detrimental to Albanian economic sovereignty. Legally based in Rome under Italian economist Amedeo Gambino’s leadership, its structure resembled institutions like Morocco’s State Bank with central functions split abroad. Board meetings were held in Rome where Albania’s gold reserves were stored. This external control allowed Zogu to sideline internal political opponents including Foreign Minister Mufid Libohova.
The bank’s Roman offices were located at Piazza dell'Esedra near Via Nazionale, adjacent to the Bank of Italy. Within Albania, branches were gradually established in Durrës (1925), Shkodër (1926), Vlorë (1926), followed by Berat, Elbasan, Korçë, and Sarandë.
During the period of the Italian protectorate of Albania (1939–1943), Italian banks Banco di Napoli and Banca Nazionale del Lavoro expanded their presence into Albania, increasing competition for the National Bank. It opened a branch in Prizren—territory annexed to Albania at that time—and contemplated further expansion into Montenegro but did not pursue it. The bank’s currency issuance became markedly inflationary, rising from 11.1 million francs at the close of 1937 to 108.4 million by the end of 1941.
Following the German occupation of Albania beginning in September 1943, the National Bank continued its operations under challenging circumstances and was forced to relocate its gold reserves from Rome to Berlin.
State Bank
Following Albania's liberation from German forces in late 1944, the Albanian branch of the National Bank was nationalized on 13 January 1945 and renamed the Albanian State Bank. The Italian legal entity of the National Bank was dissolved in 1957. Operating within a rigid monobank system, the State Bank introduced an internal retail savings division in 1949, which was subsequently renamed the Institute of Saving Accounts and Insurance, though it remained part of the State Bank. Additionally, an Agricultural Bank was created within this single-tier banking framework on .
Bank of Albania
After the collapse of communism in Albania in December 1990, reforms in the financial sector resulted in the formation of the Albanian Commercial Bank (, BTSH) on , which took over commercial banking functions and managed State Bank branches outside Tirana. On , BTSH merged with another spin-off entity, the Albanian National Bank (, BKSH, established in 1992), leading to the creation of Banka Kombëtare Tregtare (BKT, ), which was privatized in 2000 and subsequently came under the control of Çalık Holding.
The Institute of Saving Accounts and Insurance was rebranded as Savings Bank in 1991 and was spun off; it was later privatized in 2004 as Raiffeisen Bank Albania ().
In 1992, the State Bank transitioned into the Bank of Albania, assuming central banking responsibilities within a newly implemented two-tier banking structure.
A 1996 agreement facilitated the repatriation of most of the former National Bank’s gold reserves back to Albania.
Operations
The principal mission of the Bank of Albania is to preserve price stability while fostering the development of the foreign exchange system, domestic financial markets, and payment infrastructures. It carefully manages currency supply and credit levels to avoid inflation or economic slowdown, thereby encouraging sustainable growth through stable prices.
Acting as fiscal agent for the Albanian Government, the bank oversees government accounts that enable domestic and international transactions involving substantial amounts of Albanian Leks. However, Treasury functions are executed through commercial banks rather than directly by the Bank of Albania.
Monetary policy
Albania’s monetary policy is solely administered by the Bank of Albania, with its main aim being to secure and sustain price stability. The policy framework is grounded in legal provisions, economic modeling for forecasting inflation, and a suite of monetary tools designed to achieve these objectives. The inflation target is set at an annual rate of 3.0%, allowing for a margin of plus or minus 1 percentage point; during Q3 2014, inflation measured 1.7%.
The Bank implements open market operations by buying and selling securities, which play a vital role in managing short-term liquidity and stabilizing interest rates across the banking sector. Standing facilities provide banks with unrestricted access to absorb or inject overnight liquidity under normal circumstances, thereby influencing fluctuations in money market interest rates. Minimum reserve requirements control liquidity within banks and help maintain interest rate stability; commercial banks are required to hold reserves amounting to 10% of their reserve base for both Lek and foreign currency liabilities. Banks may maintain an average of up to 40% of their required reserves throughout the maintenance period as long as they meet the full requirement by its conclusion. Reserves held in Albanian currency accrue interest based on the base rate, whereas foreign currency reserves receive compensation at rates tied to those set by the European Central Bank and Federal Reserve.
Banking Supervision
The Bank of Albania is responsible for overseeing all banking operations within the nation, encompassing the authorization and continuous oversight of banks and financial entities to guarantee adherence to legal and regulatory frameworks.
The objectives of its supervisory role include:
- Ensuring the stability of the banking system while safeguarding depositors and the general public;
- Maintaining a transparent, market-oriented, and robust banking environment;
- Enhancing investor trust and encouraging sustainable industry expansion and profitability.
Primary supervisory responsibilities involve:
- Granting licenses exclusively to owners and management who are qualified, possess adequate capital, and implement effective risk management;
- Verifying that banks conduct their activities prudently, uphold sufficient capital reserves, maintain liquidity and asset quality, and comply with global best practices;
- Addressing banking challenges swiftly to protect depositors and reduce financial burdens on the government.
To fulfill these aims, the Bank of Albania:
- Formulates and enforces rules related to market entry, prudential standards, receivership processes, and regulatory compliance;
- Develops risk-oriented supervisory frameworks consistent with international benchmarks;
- Applies uniform supervisory methods and directives;
- Employs proficient personnel to supervise the sector effectively;
- Maintains ongoing communication with banks and regulatory bodies regarding mutual concerns.
Presidents of the National Bank of Albania
- Mario Alberti, 2 September 1925 – 25 March 1931
- Giuseppe Bianchini, 25 March 1931 – 25 March 1935
- Antonio Mosconi, 25 March 1935 – 8 September 1943
Directors-General of the Albanian State Bank
- Kostandin Boshnjaku, 17 January 1945 – 2 April 1946
- Abdyl Këllezi, 1946 – 1948
- Spiro Bakalli, 1948 – 1966
- Zeqir Lika, 1 April 1966 – 15 February 1974
- Llazar Gjika, 2 February 1974 – 16 November 1974
- Aleks Verli, 2 November 1974 – 1 March 1976
- Kostaq Postoli, 1 March 1976 – 15 July 1984
- Andrea Nako, 16 July 1984 – 15 July 1985
- Kamber Myftari, 16 September 1986 – 28 February 1989
- Qirjako Mihali, March 1989 – December 1990
- Niko Gjyzari, 1 January 1991 – 31 August 1991
Governors of the Bank of Albania
- Ilir Hoti, 1 May 1992 – 1 September 1993
- Dylber Vrioni, 1 September 1993 – 1 December 1994
- Kristaq Luniku, 1 December 1994 – 1 April 1997
- Qamil Tusha, 15 April 1997 – 10 September 1997
- Shkëlqim Cani, 10 September 1997 – 28 October 2004
- Adrian Fullani, 28 October 2004 – 7 September 2014
- Elisabeta Gjoni (acting), 7 September 2014 – 5 February 2015
- Gent Sejko, since 5 February 2015
Buildings
From its foundation until the late-1930s, the bank operated out of a notable edifice in Durrës designed by architect Vittorio Ballio Morpurgo, completed in November 1928. Subsequently, on , a new headquarters was inaugurated at what is now known as Skanderbeg Square in Tirana; this building was also designed by Morpurgo between 1930 and 1936. He was additionally responsible for designing branch offices in Korçë, Shkodër, and Vlorë.
Throughout the Communist period, these interwar structures remained in use by the State Bank. In 1993, the recently formed Banka Kombëtare Tregtare (BKT) assumed control over former regional branch properties, while the central bank kept possession of the Tirana headquarters and later expanded its regional footprint.
On , a training and research facility was opened by the Bank of Albania in Berat—this involved renovating a building from the 1970s to harmonize with the historic character of the city. In June 2010, it acquired the former Hotel Dajti located in central Tirana for hosting stakeholder engagements and public events. The Tirana main office underwent renovation and enlargement during the early 2010s under the direction of Italian firm Petreschi Architects.
See also
- Economy of Albania
- Franga
- Albanian lek
- Vlorë frank
- Korçë frange
- Monetary Gold Removed from Rome in 1943 (Italy v. France, United Kingdom and United States)
- List of central banks
External links
- Official website of the Bank of Albania Accessed on 01-03-2009.