Albania’s central bank increased its support for the banking system in the third quarter of 2025, stepping up liquidity injections while also buying more than €108.2mn in the domestic foreign exchange market to shore up reserves, a quarterly report showed.

The Bank of Albania said it relied on open market operations to counter a shortage of liquidity in the banking sector, raising average daily injections to ALL38bn (€389mn) through operations with maturities of between one and 13 weeks, from ALL27.4bn in the first half of the year.

Adjusted for seasonal factors, the liquidity deficit was around 64% lower than a year earlier, when it stood at ALL59.46bn. The central bank said its purchases of foreign currency helped offset the impact of rapidly rising cash in circulation during the first nine months of the year.

The liquidity gap narrowed from ALL55.4bn in early July to ALL21.7bn by mid-August, before widening again to about ALL44.5bn at the end of the quarter after the finance ministry increased its account balance by nearly ALL40bn.

The central bank said foreign exchange purchases reduced the deficit by ALL63.66bn, while an increase of ALL20.26bn in money in circulation, mainly in July and August, partially offset that effect.

Banks’ use of standing deposit facilities fell sharply to around ALL1.35bn per day, from ALL4.3bn in the previous quarter, while the central bank’s credit facility was tapped 17 times, broadly in line with earlier periods. The average amount borrowed was ALL1.10bn, unchanged from the previous quarter.

The Bank of Albania did not conduct any securities purchases or sales in the quarter, keeping its treasury bill portfolio unchanged at ALL59.57bn, the lowest level since 2019 and less than 8% of public debt issued in local currency.

In the foreign exchange market, the central bank held seven auctions to buy foreign currency from commercial banks, including one three-month forward transaction, purchasing a total of €108.2mn in the quarter, after €88.9mn and €33.2mn in the first two quarters of 2025.

Separately, it bought a further €522.6mn for monetary policy and financial stability purposes between July and September, following €72.7mn purchased between May and June, bringing total such purchases in 2025 to €595.3mn.

Under a new arrangement with the finance ministry, the central bank sold $23mn and 12mn SDRs during the quarter, taking total sales in 2025 to $111.5mn and 69mn SDRs, equivalent to about €175.64mn at end-September exchange rates.

It also purchased €4.78mn and $256,000 from the International Bank for Reconstruction and Development, the report showed.