Saving money in bank accounts is not as lucrative as before. Official
data from Bank of Albania show that interest rates have dropped
strongly, not only for deposits but also for bonds, the main ways used
by citizens for their savings.
Interest rates for treasury bonds have dropped from 7% to 3.8% for one year of maturity. Interest rates for deposits have dropped from 5.85% in 2011, to 2.65% in last November.
But one-year savings are not the only instrument. Figures show that even for other terms, interest rates have followed the same trajectory, a tendency that started in early 2012, based on several reasons.
Facing an economic crisis, the Central bank was interested in discouraging savings and encouraging consumption. For these reasons they have lowered the interest rate for seven consequent times in the past two years, bringing it to the historic low of 3%. But even with this strong drop, consumption and investments kept falling. Bank says that individuals are insecure, that’s why they prefer to keep money in banks even with such low interests.
Experts: This might encourage informal market and loan sharks
Experts say that this might create other problems in the financial market by changing the preferences of individuals.
“Consumers have been seen transferring their funds from bank deposits to treasury bonds with 10-year-terms. This might create a source of concern for banks as regards cheap sources of financing”, declared Elvin Meka, finance expert.
But the stable drop of interest rate for the national currency might bring two other negative consequences. The first one is orienting investments in foreign currencies.
“This would be an additional cost in our region. It would devaluate the currency and would neutralize the effect that was aimed for in the monetary policy”, Meka says.
Another bigger danger is that individuals might address to the informal market, a phenomenon that has not been unknown recently.
“This would create personal and social conflicts. People might tend to be looking for higher profits and give loans informally, which they may not receive in time and create problems outside of the financial management system”, Meka declared.
The annual growth of deposits dropped at 2.2% last year, from 7.2% that it was one year ago, but this is also related to the lower growth of family income.
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