EN 
 
 
OPINION OF THE EUROPEAN CENTRAL BANK 
of 15 June 2007  
at the request of the Central Bank of Malta on  draft amendments to Central Bank of Malta 
Directive No 1 on minimum reserve requirements 
(CON/2007/16) 
 
Introduction and legal basis  
On 28 May 2007 the European Central Bank (ECB) r eceived a request from the Central Bank of Malta 
(CBM) for an opinion on draft amendments to CBM Directive No 1 on minimum reserve requirements 
(hereinafter the ‘draft amendments’), issued  pursuant to the Central Bank of Malta Act1. 
The ECB’s competence to deliver an  opinion is based on Article 105(4) of the Treaty establishing the 
European Community and Article 2(2) of C ouncil Decision 98/415/EC of 29 June 1998 on the 
consultation of the European Central Bank by natio nal authorities regarding draft legislative provisions2, 
as the draft amendments relate to an instrument of m onetary policy of a Member State with a derogation. 
In accordance with the first sentence of Article 17.5 of  the Rules of Procedure of the European Central 
Bank, the Governing Council has adopted this opinion. 
 1.
  Purpose of the draft amendments  
The draft amendments align the framework governing minimum reserve requirements in Malta with that 
of the Eurosystem. In particular, the draft amendmen ts: (i) redefine the reserve  base in Appendix I of 
Directive No 1 to align it with that of the Eurosystem definition in Regulation ECB/2003/9 of 
12 September 2003 on the application of minimum reserves3; and (ii) change the computation method so 
that each maintenance period is calculated on the basis of the reserve base referring to the calendar month 
two months before the maintenance period begins. It is  intended that the draft amendments will enter into 
force on 15 July 2007.  
 2. General observations  
The ECB welcomes the draft amendments as part of the preparations for the adoption of the euro in 
Malta. Within the framework of monetary policy, which remains a CBM competence until adoption of the 
                                                 
1      Chapter 204 of the Laws of Malta. 
2  OJ L 189, 3.7.1998, p. 42.  
3       OJ L 250, 2.10.2003, p. 10. 
 
2 euro, the aim of the draft amendments is to make the Maltese minimum reserves system consistent with 
the Eurosystem standards that will apply after adopti on of the euro. This step should help Maltese credit 
institutions become familiar with the Eurosystem’s requirements and ensure a smooth start to compliance 
with the Eurosystem’s reserve requirements in Ja nuary 2008. To this end, the draft amendments 
adequately reflect the Eurosystem legal framework on minimum reserves, especially Regulation ECB/2003/9. 
 3.  Reserve ratio Directive No 1 gives the CBM’s Governor the power to determine the reserve requirement ratio, after 
taking into consideration the advice of the Monetary Policy Advisory Council. In this respect the ECB 
notes that during the period before adoption of the euro, the CBM may decide which ratio it prefers, but once the euro is adopted, Article 4 of Regulation ECB/2003/9 will apply. This provides that a reserve ratio of 2,0 % applies to all liabilities included in th e reserve base other than those for which a reserve 
ratio of 0 % is stipulated.  
 4. Procedure for calculating, notify ing and acknowledging minimum reserves  
Directive No 1 continues to be silent on the pr ocedure for calculating, notifying and acknowledging 
minimum reserves. The ECB understands that under the procedure which the CBM currently has in place, 
the CBM calculates – on the basis of the reserve base  data submitted by credit institutions – the amounts 
of reserves required and notifies these to credit institu tions before the start of the maintenance period. 
While credit institutions normally acknowledge the amounts by remaining silent, they are allowed to 
revise the reserve base data, even after the start of th e maintenance period. In this respect the ECB notes 
that once Malta adopts the euro, Article 5(3) of Re gulation ECB/2003/9 will apply. This provision sets 
out the principles to be followed by national central  banks in establishing their procedures for notification 
and acknowledgement of institutions’ individual minimu m reserves. Article 5(3) stipulates in particular 
that, once acknowledged, an institution’s minimum r eserves for the relevant maintenance period cannot 
be revised.  
 5.  First maintenance period of 2008 If the Council of the European Union decides to abroga te the derogation in respect of Malta with effect 
from 1 January 2008, the ECB will in the coming m onths issue regulations on the transitional period 
applicable to institutions in Malta which would be  subject to the ECB’s minimum reserve regime from 
2008. It is envisaged that, for the purposes of the firs t maintenance period of 2008, these regulations will, 
inter alia, redefine the reserve base which must be reported by other euro area institutions subject to 
minimum reserve requirements, as they may be au thorised to take into account, for the purpose of 
reporting the reserve base for the first transitiona l period, the liabilities owed to the abovementioned 
 
3 Maltese institutions. These regulations will not aff ect the Maltese minimum reserve regime prior to 
1 January 2008, but the CBM may already wish to ta ke this factor into account as regards the first 
maintenance period of 2008. 
 This opinion will be published on the ECB’s website. 
 
 
Done at Frankfurt am Main, 15 June 2007. 
 
[signed] 
 
The President of the ECB 
Jean-Claude TRICHET