BIS Review 16/2009  3  Five different sets of measures have been implemented: First, central banks have supplied liquidity to banks on a much larger scale than usual and providing loans with longer maturities. Central banks are also providing foreign currency loans to their banks. Second, key rates have been aggressively cut. The US entered the downturn first and had already reduced the key rate in early autumn 2007. And as the crisis developed, the Federal Reserve continued to lower its key rate. Here in Europe, key rates rose up to summer 2008 before being lowered substantially from October. Third, credit policy instruments have been introduced. Several countries are guaranteeing loans to banks. The Federal Reserve is buying mortgage-backed securities, asset-backed securities collateralised by student loans, credit card loans and loans to small businesses, as well as commercial paper issued directly by large businesses, a measure the central banks in Japan and the UK also intend to implement. The UK government has announced that they will guarantee loans to small and medium-sized firms. 4  BIS Review 16/2009  Fourth, the authorities in a number of countries felt compelled to supply risk capital to banks. Some governments have assumed ownership of financial institutions. In the UK, the government is now a majority stakeholder in the Royal Bank of Scotland and owns over 40 per cent of Lloyds. In Germany, the government is increasing its stake in Commerzbank, which is acquiring Dresdner Bank.

Indeed, between 2000 and 2006 the share of the manufacturing sector in gross value added dropped by 5.5 percentage points, while the share of services other than public administration gained more than 6.5 points to 70%. The composition of the services and manufacturing sectors has also changed. In manufacturing, for example, the share of the two largest sectors dropped from 52% in 2000 to 41% in 2006, suggesting that diversification is underway. Industry has also become leaner and increasingly oriented towards capital intensive activities such as generic pharmaceuticals and biomedicine. In the services sector, aircraft maintenance and repair, aviation engineering, software development, call centres and back office and financial services are gaining ground as are well-established activities such as tourism. This change in Malta’s productive structure reflects a conscious policy of moving away from labour intensive, low-value activities to others that use higher skills and have a potential to  4  According to the 2007 e-rankings of the Economist Intelligence Unit, Malta is the 24th most technologically advanced country in the world. The Economist Intelligence Unit defines ‘e-Readiness’ as the ‘state of play’ of a country’s information and communications technology (ICT) infrastructure and the ability of its consumers, businesses and governments to use ICT to their benefit. Rankings are based on a weighted collection of nearly 100 quantitative and qualitative criteria, organised into six distinct categories measuring the various components of a country’s social, political, economic and technological development. The Intelligent Community Forum (ICF) recognises Malta as one of the Smart21 Communities of 2008.