Euro in Albania: positivo per banche e uomini d’affari

L’arrivo della nuova moneta in Albania ha prodotto un esito positivo per banche e businessman. Le prime grazie al deposito di valuta, i secondi perché potranno meglio calcolare le differenze di prezzo dei prodotti dei vari paesi dell’UE.

"An almost insurmountable number of clients rushed to the bank boxes to open deposit accounts with western European currencies, mainly the German mark, Italian lire and Greek drachma," said central Bank of Albania experts on the eve of 2002. Banks in Albania saw a drastic increase of their clients during the last days of 2001. Queues of Albanians waiting for their turn to deposit DM, lire or Drachmas so that they would be freely turned into Euros starting next year were long, especially in other Albanian towns outside the capital where bank branches are fewer.
The reason for that is very simple. People want to profit from the lack of bank commission for such a change. All banks offered free exchange until the end of the year and the people rushed to put their savings there. There are 12 second-tier banks operating in the country and they, for sure, are very pleased with the results of this year-end. Euro banknotes will be distributed to private persons from the first working day of 2002, which in is January 3.

"The money under the mattress"
The coming of the Euro has had and will have an impact on the Albanian economy but in general bank experts and businessmen say it will be positive.
The first is that the money in circulation will increase. All Albanians took out their "sleeping money kept under the mattress", as a local saying points out. Normally Albanians have Greek drachmas, Italian lire and German marks because of family members who have immigrated to those countries. There is no official and correct figure but sources say there could be at least 700,000 Albanians working abroad, respectively in the above-mentioned countries who bring between $300-$500 million in remittances annually. Until now, and especially after the anarchic year of 1997 when Europe’s poorest population lost its life savings in the failed pyramid investment schemes, Albanians did not trust banks very much and usually preferred to keep their savings at home. They did not even like the low interest rate offered by the banks for their money.
But no more. The Bank of Albania has said that the Euro will circulate along with the respective national currency during the period of switching into Euro at the beginning of the year 2002, which slightly changes from one country to another. But on March 1 2002, the Euro will be the only legal currency in the entire Euro zone. The Bank of Albania has stated that, starting from the first workday in 2002, every subject and individual can exchange the national currency into Euro at second-tier banks and the bureau of exchange licensed by the Bank of Albania at least until February 28, 2002. After this date, the Bank of Albania has said that the banks and the bureau of exchange can decide themselves whether they will make exchanges or not. According to the bank, starting from March 1, 2002 the subjects and individuals will have the opportunity to exchange the national currency in the commercial banks in the respective state of the Euro zone and for a long time in the central banks of those countries.

The European Central Bank intensified its preparation work and used a strong sensitizing campaign in business and consumer spheres, not only in the countries included in the Euro area, but also throughout countries that have strong economic and trade ties with the Euro countries. This was done in order to confront the positive or negative effects expected to be felt after January 1st, 2002, when the common European currency will be in full force. This Bank and the European Union Economic Commission had prepared certain detailed instructions in relation to the supply of credit institutions with Euro banknotes.
Exploiting the lack of information in Albania, banks started to buy the European currencies offering lower interest rates to the Albanian citizens. They helped in spreading a kind of panic urging Albanians to sell such currencies quickly and they earned quite a lot from this speculation.

The value of the lek and foreign currencies
Bank of Albania experts acknowledge that the sudden increase of the lek value took them by surprise. The sale of marks and lire before the January 1st deadline was a very bad reaction to the Euro from Albanians. The 12 banks operating in Albania have rushed to advertise the change without commission. By offering time limits before the end of 2001 they are deceiving businessmen while looking for more clients, but lacking the necessary transparency. The argument they use is that these currencies will not be used any more after January 1 without clarifying the necessary steps made from the European bank and the central Bank of Albania. Instead of publicising the new joint currency, its exchange rates, and time of use, private banks are advertising only to attract as many currencies as possible from Albanians by offering low interest rates for deposits with such currencies. And they succeeded.
Banks operating in Albania have tried to create communication networks with the central bank in Greece and Italy, where most Albanian immigrants are and those who bring remittances, to be able to exchange their currencies even after the March 1, 2002 deadline.

"Nevertheless," adds an American Bank of Albania employee, "people rushed because they paid no commission, thus not losing that money that will be charged after January 1, 2002. Besides, even the government and the fiscal authorities in general will be pleased because they will manage to somewhat calculate the exact amount of hard currencies circulating in the country. Putting money in the banks may also be considered another step for the tiny country in becoming integrated with the western European market economy standards."
All second-tier (commercial) banks offered leaflets with the proper explanations. Local media had almost daily stories on the Euro-related effects. Television stations held many talk shows by the end of December with bank experts to clarify details.

In December the local currency, the Lek, had a surprisingly higher evaluation with respect to the other hard currencies. Albania is a USD-covered country (unlike other eastern European countries that have the German mark) but much of its trade is done also with Greek Drachmas, Italian Lire and German marks.
The entrance of big amounts of money from immigrants’ remittances might have caused the fall of the exchange rate of the Euro-becoming hard currencies. The fear of losing some money from the bank commission charge is one reason people rushed to deposit their savings, thus causing a strengthening of the lek.

But, on the other side, there exists also the idea that some of this money entering the country now could have possibly been earned illegally in Europe and brought to the country to get free access to the exchange rate taking into consideration the lack of law into the former communist state. They cannot be changed so easily in the western European countries. Bank experts say that in the country big amounts of money, earned illegally in other countries, could have possibly arrived in the Albania where it is easy to change them. Albania may be considered a good place for smugglers to change their money. Those that have profited more from this are foreign private banks operating in the country.
The U.S. dollar exchange rate fell drastically in Tirana’s market, this time under the psychological limit of 140 leks per dollar. It reached the level of 134 leks per dollar. German marks and Italian lire were somewhat higher compared to the Albanian lek going to 60 and 60.5 leks respectively. The strengthening of the latter currencies comes because of the increase of the Euro value in the international market. Nevertheless it should be mentioned that since one month, the mark, lire and Greek drachma have been undervalued in the Albanian market. The central Bank of Albania thinks that the decrease in their value has come as a consequence of the increase of the offer to citizens who want to change them before they are turned into Euros next year.

The fall of the value of the dollar has brought about the fall of the equivalent prices of the goods imported, which means that customs, that is, the government will earn less this time.

Mixing Euros and Business
Bank experts say there will be a normal kind of confusion among Albanian businessmen for the first two months of the year. The Bank of Albania, however, has taken measures to supply credit institutions with Euro banknotes, and to distribute this money from credit institutions to companies where money is kept temporarily, such as retail sellers or machines that carry out automatic sale of goods, starting from September 1, 2001.
Credit institutions will not be debited this year for the banknotes they will be supplied with. The value of this money will be paid in three equal amounts during the coming year on the 2, 23, and 30 January 2002. These institutions will not be asked for collateral against the banknotes they will be supplied with prior to January 1, 2002, but such institutions will assume the risk deriving from the euro banknotes that can be damaged or stolen.
From a superficial survey in the Albanian business sphere, the results are that there still isn’t a clear concept about the Euro mechanism, and Albanian businessmen, who have gotten used to carrying out their transactions only in U.S. dollars or other strong European currencies for the past ten years, will find it difficult to get acquainted with the new European currency.

As a matter of fact, the Bank of Albania is taking the right position in this situation, but business associations or chambers of commerce are still waiting and are lagging behind in terms of making the procedures required to allow the Euro to enter into circulation known to businessmen. Actually, Mediterranean countries have close economic ties with European Union states, but according to financial specialists, the propaganda about the Euro is still insufficient in these countries although the EU countries are their main trade partners.
"There should be no problem at all and no fear in the Albanian market," said Adrian Shehu of the still state-owned Savings Bank of Albania. "We, and all the other commercial banks have promptly applied the guidelines to the Bank of Albania and we are not expecting anything strange."
Bank experts also said they do not fear the arrival of great amounts of fake Euro. They said Albania is still a USD dominated area, thus it might not interest illegal dealers. Then the fake dollar in some cases might have been produced in the country, something that can be hardly done for the Euro. The law is becoming stronger everyday.
But fearing a rush back to the banks during the first days of January to get the Euro, the banks have applied high fines for clients who want to take out the deposit before it is matured.
Selami Xhepa of the Bank of Albania said that the Euro will affect business positively. First it will affect trade and import prices. Albania’s main trade partners are Italy, Greece and Germany and then there is a lot of exchange with the neighbouring countries where German marks dominate.

"It will be easier for Albanian businessmen to see the difference in price in Greece and Italy. Thus business will probably change direction toward the best price and also the best product. There will be no problem for businessmen to see that cigarettes or coffee cost that much in different countries and can calculate easier their transport cost, and thus their profit," says Teodor Misha of the Adrion Ltd, an international media distribution company. "Now they will deal only with USD and Euro, this is most of their business dealings. Bureaucracy will be smaller. But I fear that the western counterparts may not play well and Albanian businessmen should be very careful when making new contracts. A product that with the normal exchange rate may cost one Euro may be ‘naively’ offered for 1.1 Euro. In general business will become professional because businessmen will be obliged to make all dealings through the banks as there is no Euro cash around."