In any event, the final calibration of the minimum ratio should be completed in 2017, with a view to its definitive inclusion in the solvency rules in 2018. This calibration will define the interrelatedness of the ratio to the other solvency measures and, specifically, the conditions under which it will act as a binding constraint. We are still, therefore, at the analysis and calibration phase. Next year, banks will be required to publish the ratio as a transparency measure, which will be conducive to the final design of the new regulatory requirement attaining a sufficient degree of consistency and homogeneity. Evidently, the introduction of new prudential control measures entails an additional effort for banks, at a time when the sluggishness of economic activity is exerting significant pressure on their margins. Undoubtedly, however, adopting these measures while observing a prudent implementation calendar will have an appreciably positive effect on the industry’s soundness and resilience and, consequently, on the economy as a whole. Banking union That said, as experience categorically shows, the harmonisation of solvency rules is not a sufficient guarantee to ensure homogenous control of the financial position of banks located in different jurisdictions. As important as having similar rules is the application of a common supervisory approach. And the homogeneity of the prudential control exerted over financial institutions is particularly important in economic areas that share an integrated banking market and a common currency. Hence the importance for Europe of setting up a single supervisory mechanism.

The significance of having as our own the world’s second most important currency is not lost upon a central banker. For, beyond its proven economic benefits, the euro signifies the virtual elimination of the potential risk of an exchange rate crisis to which the currencies of small, open economies are exposed on a daily basis in a world characterized by the free movement of capital. We have now traded in this vulnerability for the greater security and credibility afforded by a major international currency. The euro has indeed been a success story in many respects. The disciplines of Economic and Monetary Union (EMU) were intended to promote the creation of a macroeconomic environment in which countries could thrive in an increasingly competitive market place. The euro area’s track record in terms of price stability, trade expansion and employment creation suggest that these expectations have been largely fulfilled. The Central Bank of Malta is, therefore, proud to have become a member of the Eurosystem. From an institution charged with the preservation of price stability in Malta and with safeguarding the integrity of our national currency, the Bank now shares responsibility with the other members of the Eurosystem for shaping monetary policy in the best interest of 320 million people in fifteen countries. This is a task which my colleagues at the Bank and I approach with confidence and enthusiasm. From a national perspective, the challenge now is to maximize the benefits of participation in monetary union by making further progress on the path of reform.