Central Bank ranks mandated by EU regulations – finance minister

Finance Minister Edward Scicluna said it was "very unfortunate" that the Opposition had targeted the Central Bank in its campaign to "sow doubts through political innuendo".

Post-financial crisis regulation has led to the establishment of an EU-wide Systemic Risk Board (ESRB) within the European Central Bank's (ECB) financial infrastructure, and whose remit is financial stability.

One of the repercussions of the financial crisis was that National Central Banks, especially those in eurozone countries, have been mandated to establish appropriate institutions in their respective countries in order to link with the ESRB.

Scicluna explained 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.

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.

"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 finance minister explained, adding that the board must be composed of an odd number of members.

"The public can be assured that the persons who will be appointed to the posts would be the most qualified on the island."

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.

"The Shadow Minster of Finance was kept abreast through receipt of these amendments and relative correspondence. Cordial briefing meetings were also held between him and the Finance Minister."

According to the Ministry for Finance, the relationship between the Governor of the Central Bank and the Minister for Finance "could not be better".

"In fact, both consult regularly, and work together closely as they have done at several meetings, such as the informal Eurogroup meetings and others with international organisations, including the International Monetary Fund and various rating agencies, both in Malta and in Washington," the ministry said.

The ministry also warned it was vitally important that Malta's financial services industry, which has recently come under attack from our external competitors, was not undermined from within by partisan statements motivated by short-term political advantage.

"Tarnishing the reputation of the long-standing Central Bank of Malta will lead to irreparable damage to Malta's own international reputation."