Albania: Technical Assistance Report—Investment Funds and Interconnectedness Risks
IMF Staff Country Reports, May 18, 2023
Source details
- Canonical URL
- Albania: Technical Assistance Report—Investment Funds and Interconnectedness Risks
Other formats
Bibliographic details
- Published: May 18, 2023
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9798400241758.002
Executive summary and scope
- Presents a technical assistance report on investment funds and interconnectedness risks in Albania.
- Focuses on the fund sector’s structure, exposures, channels of risk transmission, and regulatory recommendations for the Albanian Financial Services Authority (AFSA).
Key findings: sector structure and interconnectedness
- The fund sector has been expanding and remains highly concentrated.
- Interconnectedness between funds and the rest of the financial system is limited.
- Liability-side structure:
- Retail investors mainly hold fund shares.
- Institutional investors play a minor role.
- Asset-side structure:
- Funds do not have significant direct exposures to securities issued by financial entities.
- Exposures to the sovereign market are the main risk transmission channel between funds and the rest of the financial system, given the lack of liquidity of domestic sovereign bonds.
Risk drivers and channels
- Sovereign exposures are the principal channel for risk transmission from funds to the wider financial system.
- Lack of liquidity in domestic sovereign bonds amplifies transmission risk.
Policy recommendations
- AFSA should enhance its risk monitoring of the fund sector and its interlinkages with the rest of the financial system.
- AFSA should consider expanding the range of Liquidity Management Tools available to funds.
- The current regulatory framework only foresees suspension of redemptions.
- Other tools (not specified in this summary) could be used to mitigate the risk of destabilizing redemptions.
Content in this bundle
- 1albea2023001