Albanians are "moving away" from the euro - BoA: Deeuroization package has an effect on reducing foreign currency loans and deposits
Albania has made strides towards reducing the use of the euro and increasing the use of the lek. This is according to the Bank of Albania in its latest report on the de-euroization process, while emphasizing that despite this improvement, the euro continues to be widely used and more efforts need to be made to reduce its presence in the country's economy and financial system.
Specifically, a decline in unhedged foreign currency loans was observed in the first half of 2025. Therefore, the share of loans taken in euros when income was in lek decreased.
There has also been a decrease in the share of liquid assets in foreign currency to short-term liabilities in foreign currency, a decrease in foreign currency loans in relation to total loans, a slight decrease in the share of foreign currency deposits and a further increase in deposits in the local currency with a maturity of over one year. All of these are positive indicators towards deeuroization.
In May of this year, the Bank of Albania set several ceilings on the amount of credit that banks will provide to citizens who want to buy a first or second home in lek and euro. The imposition of tighter limits on foreign currency loans has supported the increase in the use of the local currency in this type of loan.
Since 2018, the Bank of Albania has been implementing a package of measures aimed at reducing the use of foreign currencies and promoting the use of the local currency. The deeuroization package contains three main elements that include differentiating the reserve requirement ratio for foreign currency liabilities and those with maturities in lek, higher requirements for foreign currency liquidity indicators, and raising citizens' awareness of the risks posed by borrowing in foreign currency.
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