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The financial system exists to facilitate, a settlement and the flow of funds from one party to another. In such a system, financing is easily raised and allocated with the risk associated with such financing easily managed A developed financial system is one that has a secure and efficient payment system, security markets and financial intermediaries that arrange financing, and derivative markets and financial institutions that provide access to risk management instruments (www.wikipedia.org).
Other sectors of the country's financial system are not large enough to be systematically important. How ever, growth in the insurance sector is rapid and the fear is that problems within this sector may undermine confidence in the institutions (Ingves and Dappler, 2005).
The Bank of Albania (BOA) is at the hem of the financial system, setting the rules, ensuring fair play. It is the keeper of the government accounts, carry out and negotiate government lending and borrowings. It also monitors the other institutions (Commercial banks and other forms of depository institution.) It issues and revokes licenses and do not compete with other institutions in ordinary business operations, but uses its lender of last resort policy, and open market operations to bail the economy and other banks out of recession (Article 16 of Law No.7491, dated April 29, 1991).
Other institutions include, state banks, banks limited by shares, cooperative banks and private banks with Albanian capital exclusively. Private or state banks with Albanian and foreign capital, and private banks with foreign capital. Membership deposits and credit are open to both physical and legal persons. ...
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