In his weekly blog, Finance Minister Prof. Edward Scicluna explains the proposed amendments to the Central Bank Act, which he presented to parliament a few days ago, which propose, among other changes, the creation of a new Deputy Governor position within the Central Bank of Malta.
Prof. Scicluna explains that this change must be seen within the context of European and international developments and the post-financial crisis regulation which led to the establishment of an EU-wide Systemic Risk Board (ESRB within the European Central Bank’s (ECB) financial infrastructure.
He notes that one of the repercussions of the financial crisis is that National Central Banks, especially those in eurozone countries, have been mandated to establish appropriate institutions in their respective countries.
Prof. Scicluna explains however that given its size, Malta opted not to establish a new institution, but instead to set-up a joint Financial Stability Board. This board would bring together the Central Bank of Malta, the Malta Financial Services Authority, and a Deputy-Governor within the Central Bank of Malta – a post which the proposed amendment to the Central Bank Act would bring about, and which would be solely focused on financial stability.
He points out that such posts may indeed be found in other financial institutions across Europe, such as the United Kingdom’s Bank of England, France’s Banque de France, and others.
Additionally, Prof. Scicluna explains that the need for an additional director within the Central Bank of Malta Board arose in order to ensure that the Board’s composition is not disrupted (the board must be composed of an odd number of members).
Whilst the above decision was taken by the Government early April, the last five months were spent consulting with the Central Bank, which in turn sought both informal and formal opinions from the European Central Bank on the wording of the proposed amendments, Prof. Scicluna says.
Prof. Scicluna emphasises that it is essential that Malta’s financial services industry is not undermined from within by partisan statements motivated by short-term political advantage.
– Thursday, 3rd October, 2013