by Fiorella Ellul Sullivan
The recent happenings surrounding the collapse of the Cypriot banking system and the Eurogroup’s unprecedented plans for the Cypriot restructuring programme have brought to the fore questions about Malta’s economy – speculations that have been fuelled by certain members of the international press suggesting superficial comparisons between Malta and Cyprus. These comparisons are both misinformed and misconstrued.
The government of Malta issued a statement affirming the strength of Malta’s banking sector. Malta joined the euro area in 2008 in order to further enhance its macroeconomic and financial stability, and to contribute to the stability of the euro area-wide economic and financial system. Together with other EU Member States, Malta participated in the setting up of a euro area regulatory and supervisory framework which includes the European Systemic Risk Board (ESRB) and the European Supervisory Authorities (ESAs).Malta contributes actively to these institutions oversight activities which have included the stress-testing of systemically important banks. Furthermore, the national financial regulatory and supervisory system is regularly subject to assessments by international organisations including the EU and the IMF.
Central Bank Governor Josef Bonnici also dismissed as misleading any comparison between Malta’s banking system and that of Cyprus. The problems facing Cypriot banks included losses made on their holdings of Greek bonds, whereas Maltese domestic banks have limited exposure to securities issued by the programme countries, he said.
Malta’s banks have consistently been noted for their resilience and soundness; its banking sector scored significantly higher in terms of stress-test indicators and in the Global Competitiveness Report. Malta’s debt is also mainly held locally and Maltese Banks are not materially exposed to foreign sovereign debt risks.
Malta is a touristic haven but certainly not a tax haven, according to French President Francois Hollande, who is satisfied with its strong banking system.We see it is a system that is properly regulated and there is no apparent risk and if you are suggesting there may be a parallel with other countries this is not the case, Mr Hollande said, discarding any comparisons between the banking structures of Malta and Cyprus.
Mr Hollande, with Maltese Prime Minister Joseph Muscat, was addressing the media after their one-hour meeting at the Elysees Palace in Paris. ‘Joseph and I share the same views on the future of Europe.We want a Europe that is more stable,’ Mr Hollande said, adding that the meeting spoke of the need for the banking union to be put in place by 2014. ‘Malta wants to play its full role in the banking union’, he said.
Malta adopts a conservative approach driven by a policy of gradual but steady growth, with a widely diversified base of international clients and, importantly, without having become over-dependent on the growth of the financial services sector, susceptible as it is to the realities of the market, for the economic output and stability of its economy.