In this respect, a regulatory and supervisory framework based on high international standards is already in place. Maltese legislation in this area in fact incorporates almost all the features of the corresponding EU directives, and the legislative  4  BIS Review 70/2002  amendments I have just referred to have brought about almost total harmonisation. Institutional responsibilities are divided between the Malta Financial Services Authority, which is responsible for the regulation and supervision of banking, insurance and investment services; and the Central Bank, which is charged with ensuring the stability of the system as a whole. The Bank is also responsible for the domestic payments system, which is being upgraded in line with developments in the euro area. According to a recent background paper prepared by the ECB , Malta already has a financial intermediation mechanism that broadly mirrors the composition of different market segments in the euro area member states. Despite the growth of non-bank financial intermediaries and the development of money and capital markets, the banks remain the key financial institutions. Total bank assets amount to more than double GDP, whereas the ratio of domestic credit to GDP is broadly in line with the EU average. More importantly, the banking system is generally healthy, enjoying ample liquidity and a broad capital base, with the ratio between own funds and risk-weighted assets standing close to 14%. Some institutional aspects of EMU preparations I shall conclude with some remarks on preparations of a more operational nature for eventual integration within the ESCB.

What has been generated in recent years is a flourishing market for “green bonds”, with a primary market exceeding € billion,11 made up largely of private issuers. Although these developments are promising they are not without problems. First, there is no common denominator to determine which assets are entitled to the green label and which are not. Private initiative provides a response in the form of market standards12 and certifying companies, but due to their relative novelty, they still lack a sufficiently established record and reputation. Also, given the rapid growth of this market, there is some concern among issuers and investors about the possibility of greenwashing. Certain issuers may be attempting to appear more conscientious in relation to climate change, for reasons of corporate image and social responsibility, than their actions really imply, and this may generate future reputational problems. Especially useful for harmonising this market and avoiding these risks are the work performed in the European Union on the adoption of a taxonomy for sustainable activities, and the recognition of the importance of mitigation actions (investment to reduce the emissions of the most polluting activities). 8  Alan Blinder (2018), Advice and Dissent: Why America Suffers When Economics and Politics Collide. The Paris Agreement, ratified by 187 countries, including Spain, highlights the need for “making finance flows consistent with the pathway towards low greenhouse gas emissions and climate-resilient development”; Article 2(1)(c) of the Paris Agreement. https://unfccc.int/files/meetings/paris_nov_2015/application/pdf/paris_agreement_spanish_.pdf. 10 https://ec.europa.eu/commission/presscorner/detail/es/ip_20_17. 11 https://www.climatebonds.net/ 12 The Green Bond Principles of the International Capital Markets Association (ICMA).