New joint financial stability board announced by Central Bank governor
Central Bank governor announces formation of Joint Financial Stability Board for Malta at Institute of Directors’ conference
Governor of the Central Bank of Malta Prof. Josef Bonnici announced during the Institute of Directors conference held at the Malta Financial Services Authority (MFSA) on January 17 that the CBM, in its capacity as the macro-prudential authority, has agreed with the MFSA to establish a Joint Financial Stability Board (JFSB) within a few days.
The new Board will provide a mechanism to enhance the cooperation between the CBM and the MFSA for the assurance of financial stability in Malta. The objective is to strengthen the resilience of the financial system and to mitigate the build-up of systemic risk. The new Board will be made up of senior personnel from the MFSA and the CBM, and will mirror the model adopted by the European Systemic Risk Board (ESRB).
The ESRB is an independent body of the European Union and is part of the European System of Financial Supervision (ESFS), the purpose of which is to ensure the supervision of the Union's financial system. The ESRB is hosted and supported by the European Central Bank in response to the ongoing financial crisis. It is tasked with the macro-prudential oversight of the financial system within the Union in order to contribute to the prevention or mitigation of systemic risks to financial stability in the Union and to ensure a sustainable contribution of the financial sector to economic growth. Malta's JFSB will have a similar function in the local context.
Speaking at the Institute of Directors (IoD) Conference Prof. Bonnici said that strengthening the governance and oversight of the financial system is imperative to ensure stability and deliver confidence to the marketplace. IoD Chairman James Satariano welcomed the announcement saying that the new Board will enhance Malta's role as an international financial centre and business hub.
"IoD has been flying the flag for Corporate Governance in Malta since the turn of the century," Satariano said.
"Financial services have become a cornerstone of our economy, with their contribution to Malta's GDP approaching 20%, financial services are in the spotlight like never before, and we are now an international financial centre, a hub for the industry in the Mediterranean. Our transparency and the quality of our governance is pivotal to success."
"The timing of Professor Bonnici's announcement, made during IoD's first Conference of 2013, demonstrates that Corporate Governance is certainly not standing still on the Maltese Islands and is fully in step with developments across Europe, the new JFSB will be responsible for supervision of stability within the financial system at the macro level, as well as oversight. The purpose of the oversight is to prevent emergence of systemic risks to Malta's financial stability and mitigate their impact as well as support financial sector consideration of macro-economic developments.
"It is quite clear from the speech made today by Bank of Valletta's Chairman, Frederick Mifsud-Bonnici, that this new oversight Board will be welcomed by all financial system stakeholders in Malta."