Opinion of the European Central Bank of 13 September 2013 on amendments to the Central Bank of Malta Act (CON/2013/69)
Date: 2013-09-13
Institutions: European Central Bank
Subjects: Malta, banking supervision, central bank, financial stability, national law

EN 

ECB-PUBLIC 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 13 September 2013 

on amendments to the Central Bank of Malta Act 

(CON/2013/69) 

Introduction and legal basis 

On 14 August 2013, the European Central Bank (ECB) received a request from the Central Bank of Malta 
(hereinafter ‘CBM’) for an opinion on draft amendments to the Central Bank of Malta Act1 (hereinafter 

the ‘draft law’). 

The ECB’s competence to deliver an opinion is based on Articles 127(4) and 282(5) of the Treaty on the 

Functioning  of  the  European  Union  and  the  third  and  sixth  indent  of  Article 2(1)  of  Council  Decision 

98/415/EC  of  29 June  1998  on  the  consultation  of  the  European  Central  Bank  by  national  authorities 
regarding  draft  legislative  provisions2,  as  the  draft  law  concerns  the  CBM.  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 law 

The draft law introduces additional amendments to the Central Bank of Malta Act in order to cater for 

further legal developments with regard to the previous version of the draft legislation, on which the ECB 
commented in Opinion CON/2011/433. The draft law proposes adding a new paragraph (d) in Article 5(1) 

in order to clarify that the CBM has been given the macro-prudential policy mandate, as well as a new 

Article 17B to establish a Joint Financial Stability Board (JFSB) to ensure effective cooperation between 

the  CBM  and  the  Malta  Financial  Services  Authority  (MFSA),  which  is  the  competent  authority  as 

regards banking supervision. A new Article 8(3) also provides for the appointment of a second Deputy 

Governor. 

2. 

Clarification of the macro-prudential policy mandate 

2.1  Article 5(1)(d) of the draft law provides the CBM, as the sole macro-prudential authority, with the 

macro-prudential policy powers set out in the new Article 17A of the draft law, notwithstanding the 

fact  that  this  task  is  currently  assumed  under  Article  5(1)(c)  of  the  Central  Bank  of  Malta  Act, 

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2  
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Cap 204 of the Laws of Malta. 
OJ L 189, 3.7.1998, p. 42. 
All ECB opinions are published on the ECB’s website at www.ecb.europa.eu. 

 
 
 
 
 
                                                 
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which provides that the Bank is entrusted with the function of ensuring the stability of the financial 

system. 

2.2  The  ECB  supports  the  design  of  effective  macro-prudential  policy  frameworks  within  Member 

States,  in  line  with  the  guiding  principles  set  out  in  Recommendation  ESRB/2011/3  of  the 

European Systemic Risk Board of 22 December 2011 on the macro-prudential mandate of national 
authorities4. Moreover, the ECB considers that the ECB and national central banks (NCBs) should 

play a leading role in macro-prudential oversight, given their expertise and existing responsibilities 
in the area of financial stability5.  

2.3  At the same time, while the CBM’s performance of macro-prudential tasks should be operational 
and  financially  independent6,  it  should  not  affect:  (a)  the  CBM’s  functional  and  financial 

independence;  or  (b)  the  European  System  of  Central  Banks’  performance  of  its  tasks  under  the 

Treaty and the Statute of the European System of Central Banks and of the European Central Bank 
(hereinafter the ‘Statute of the ESCB’)7. The ECB also understands that current provisions of the 

Central Bank of Malta Act, which ensure the CBM’s independence in implementing its objectives 

and performing all its tasks and activities, will also cover the formulation and implementation of 

macro-prudential policy. 

2.4  For  the  benefit  of  its  macro-prudential  oversight  tasks,  the  CBM  should  be  authorised  to  require 

and obtain in a timely fashion all data and information collected from reporting entities, such as all 

financial  corporations  and  other  entities  which  have  the  information  at  their  disposal,  including 
information other than that currently collected for other purposes, such as statistical purposes8. In 

this  regard,  the  ECB  welcomes  the  amendment  to  Article  23  of  the  Central  Bank  of  Malta  Act, 

which gives the CBM the general power to collect information related to statistics in respect of the 

CBM’s  macro-prudential mandate. The new Article  17A(2) provides the CBM, in its capacity as 

the  single  macro-prudential  authority,  with  a  mandate  to  cooperate  with  the  ESRB  and,  where 

necessary, with other Member States’ macro-prudential authorities, in particular with regard to the 

exchange of information required to ensure effective macro-prudential oversight. 

2.5  This  opinion  does  not  prejudice  the  conclusions  of  the  ESRB’s  follow-up  assessment  of  the 

abovementioned recommendations, which will be issued pursuant to Article 17 of Regulation (EU) 

No 1092/2010 of the European Parliament and of the Council of 24 November 2010 on European 

Union  macro-prudential  oversight  of  the  financial  system  and  establishing  a  European  Systemic 
Risk Board9. 

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OJ C 41, 14.2.2012, p. 1. 
See, for example, paragraph 5.1 of Opinion CON/2012/44, paragraph 3.1 of Opinion CON/2012/55 and paragraph 2.1 of 
Opinion CON/2013/30. 
See recommendation E of Recommendation ESRB 2011/3. 
See  paragraph  4  of  Opinion  CON/2009/88,  paragraph  3.2  of  Opinion  CON/2012/55  and  paragraph  2.3  of  Opinion 
CON/2013/30. 
See recommendation C of ESRB Recommendation 2011/3. 
Regulation (EU) No 1092/2010; OJ L 331, 15.12.2010, p. 1. 

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3.  

Joint Financial Stability Board 

3.1  The ECB welcomes the CBM’s decision to establish the JFSB in the Central Bank of Malta Act by 

virtue  of  Article  17B  of  the  draft  law  and  considers  that  this  will  enhance  the  CBM’s  role  as  a 

national macro-prudential authority. The ECB understands that the JFSB mainly serves as a forum 

for  cooperation  between  the  CBM  and  the  MFSA  on  issues  which,  though  falling  within  the 

separate competences of the CBM and MFSA, may ultimately affect financial stability generally. 

The ECB also understands that the new Article 17B will not shift any executive powers relating to 

macro-prudential policy to the JFSB, and that the insertion of Article 17B(1) will further clarify the 

JFSB’s status as a body intended to assist the two institutions in the performance of their regulatory 

tasks by facilitating cooperation between them. 

3.2  On a related note, the amendments provide for two types of macro-prudential instrument. The new 

Article 17A covers the first type addressing macro-prudential issues, referring to directives issued 

by  the  CBM  and  addressed  to  commercial  banks,  in  order  to  implement  macro-prudential  policy 

and instruments. The second refers to instruments addressing financial stability matters generally 

and  macro-prudential  issues  specifically,  and  comprises  the  JFSB’s  recommendations,  advice  or 

assessments  addressed  to  public  authorities  or  public  institutions.  The  ECB  understands  that  the 

CBM is the sole competent authority to issue macro-prudential instruments, primarily concerning 
the banking sector10, while the JFSB, as a forum for cooperation, may make recommendations to 

the  CBM  Governor  on  macro-prudential  instruments  and  may  further  advise  other  public 

authorities or institutions on financial stability issues. 

3.3  The  ECB  also  welcomes  Article  17B(4),  which  provides  that  the  JFSB’s  functions  should  be 

performed without prejudice to the Treaty and the Statute of the ESCB and any legal acts issued 

thereunder,  ensuring  that  the  JFSB’s  activities  must  also  take  account  of  the  ECB’s  macro-

prudential supervisory powers in the context of the single supervisory mechanism. 

4. 

Appointment of a second Deputy Governor 

4.1  The  ECB  welcomes  Article  8(3),  which  provides  for  the  appointment  of  a  second  Deputy 

Governor, who will be responsible for the financial stability mandate. A number of NCBs already 

employ this arrangement, based on an allocation of tasks. The ECB agrees that having two Deputy 

Governors, one responsible for the monetary policy mandate and the other for the financial stability 

mandate,  will  improve  the  streamlining  and  effective  division  of  responsibilities  at  senior 

management level within the CBM. 

4.2   A  Member  State’s  relevant  authorities  have  the  duty  to  take  necessary  measures  to  ensure  the 

timely  appointment  of  a  successor  if  a  member’s  position  on  one  of  its  NCB’s  decision-making 

bodies becomes vacant. In this regard, the ECB welcomes the amendment to Article 8(3)(b), which 

10  

See Article 17A of the draft law. 

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reflects the need for the smooth and continuous functioning of the CBM’s decision-making bodies. 

By virtue of this provision, a Deputy Governor may be temporarily appointed by the Board to carry 

out the duties of a Governor in case of a vacancy. However, the appointment of a new Governor 

under the provisions of Article 8 should take place as soon as possible. 

This opinion will be published on the ECB’s website. 

Done at Frankfurt am Main, 13 September 2013. 

[signed] 

The President of the ECB 

Mario DRAGHI 

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