In 1968, the Central Bank of Malta was established as an independent institution and monetary authority. Its main tasks are to ensure overall and macro-economic stability and to maintain price stability and economic welfare for its citizens. Confidence in a local financial system is crucial for the strength of the economy. Therefore, central banks and other regulators seek ways to protect these objectives. These include the monetary policy and oversight of the commercial banking system. Therewith, central banks play a crucial role in ensuring the stability of member institutions, preventing bank runs, and discouraging reckless or fraudulent behavior by member banks.
Being part of the Eurozone, the Central Bank of Malta joined the European System of Central Banks in 2004. This membership allows the bank to look at their economy from a local perspective as well as a competitive landscape initiated by the European single market. As a result, the European passporting rules allow EU residents from other member states to reside, transact and conduct business in Malta. This free market changes the financial risk pattern of the domestic ecosystem in all the member states and requires them to implement strict controls and uniform codes of conduct.
Monetary policy and financial stability are the two main pillars of the Central Bank of Malta. Consumer confidence is a critical determinant to achieve these objectives, which is furthered by sustainable economic growth. An effective public strategy encourages investment and employment in order to increase economic welfare. To protect the financial system and local economy, the Central Bank of Malta collaborates with the Malta Financial Services Authority (MFSA) and the Ministry of Finance (MFIB) in the Joint Financial Stability Board. In matters relating to the local banking system and its supervision, Malta cooperates with the European Central Bank (ECB). The ECB directly supervises systemically important financial institutions and significant credit institutions and may take direct responsibility for a less significant credit institution. The latter allows the ECB to revoke access to the Eurosystem of a financial institution even though a license is approved on a domestic level.
Alongside its tasks and duties, the Central Bank of Malta maintains direct relationships with licensed financial institutions. It follows that the central bank oversees and regulates the operation of and participation in payment systems. To avoid disruption of the payment system, the central bank may impose administrative penalties in respect of non-compliance with its directives and can refer severe violations to the MFSA and ECB for further action.
Central Bank of Malta:
Valletta VLT 1060, Malta
Tel: (+356) 2550 0000
Fax: (+356) 2550 2500